Cardano (ADA) has experienced a significant rally, increasing by 55% within a week and trading at $0.57, a level not seen since April. This surge has led to significant unrealized gains for its holders.
On-chain data highlights a positive market value to realized value (MVRV) ratio for ADA, implying profitability for holders. However, this could prompt profit-taking, leading to a short-term price pullback.
The current MVRV ratios over 30 and 90 days stand at 25.70% and 43.87%, respectively. A positive MVRV indicates that the current market price exceeds average purchase prices, suggesting overvaluation.
This scenario often leads investors to cash out, increasing selling pressure and potentially driving prices down in the short term, despite strong gains.
A high transaction volume in profit recently could further incite selling among Cardano holders seeking to lock in gains.
IntoTheBlock data reveals that 52% of Cardano addresses are currently 'in the money,' but if widespread selling begins, the price could retreat to $0.54 or even $0.47.
Nevertheless, if investors hold on and accumulate, ADA might surpass $0.60, approaching its year-to-date high of $0.81.
