Can Cardano Overcome Its Struggles as It Lags Behind Solana?

Cardano (ADA) was among the standout performers in the 2021 bull market, but it has struggled to achieve significant price gains in the current cycle.

Normally, such underperformance might lead to a mass sell-off as holders lose confidence. Surprisingly, though, many ADA holders seem to be taking a different approach.

No Giving Up on Cardano, Holders Data Shows

Data from the Balance by Time Held metric shows that the number of long-term Cardano (ADA) holders has hit an all-time high of 3.2 million. These long-term holders are typically those who have held ADA for at least one year.

Historically, holder numbers tend to decline as a bull market peaks. For instance, after ADA’s price soared to $3.10 in September 2021, the number of holders dropped, reflecting profit-taking during the market’s peak.

However, by January 2023, this trend reversed as the number of long-term holders began to increase again, hinting at the early stages of a new bull cycle. Since then, ADA’s price has climbed from $0.26, briefly reaching a peak of $0.70, as these committed holders maintained their positions in anticipation of further growth.

While ADA’s price recently dipped to $0.33, the increase in the number of holders suggests optimism for a potential rebound. However, this cycle has unfolded differently from the last. In 2021, Cardano experienced an explosive rally during altcoin season, but this time, altcoins haven’t delivered the same performance, despite high expectations.

Additionally, Cardano has been trailing behind Solana (SOL) in attracting new users. Both ADA and SOL were standout performers in the previous bull market, but this cycle, Solana has drawn more new market participants.

Despite this initial success, Solana has seen a decline in new, active, and zero-balance addresses over the past month, indicating waning confidence in its short-term prospects.

Read more: How To Stake Cardano (ADA)

Should the number continue to decline, ADA’s potential recovery could be hindered. However, it is also important to consider other on-chain and technical indicators to evaluate the price forecast. 

ADA Price Prediction: Rally Possible, But Not Here Yet

To assess the token’s future potential, BeInCrypto examines the Market Value to Realized Value (MVRV) ratio. This ratio shows the relationship between an asset’s current price and the value at which it was acquired.

The higher the ratio, the more holders are willing to sell due to increased unrealized profits. However, a decrease suggests a rise in unrealized profits. In this instance, holders will be unwilling to sell as they may assume that the token is undervalued. 

At press time, ADA’s 30-day MVRV ratio is -10.11%, meaning that if all holders sell at the current price, the average return will be losses. However, due to the conditions mentioned above, this may not happen.

Historically, ADA price bounces when the MVRV ratio is between -7.66% and -27.32 %. Therefore, while the price can still decrease, it is undervalued and could pump later on.

From a short-term perspective, ADA formed a bearish pennant between mid-July and early August. This pattern is characterized by a sharp price drop followed by consolidation within a symmetrical triangle on the daily chart.

While symmetrical triangles can signal either bullish or bearish moves, the Relative Strength Index (RSI) currently sits at 39.55, suggesting that bearish momentum persists. With the RSI below 40, ADA is likely to face continued downward pressure unless market conditions shift in favor of buyers.

If this trend continues in the coming days, ADA’s price may drop to $0.31. However, a surge in buying pressure can change the cryptocurrency’s conditions. 

Read more: Cardano (ADA) Price Prediction 2024/2025/2030

If this happens, ADA’s price may reach $0.37. If accumulation intensifies with high trading volumes, the token could rally further, potentially reaching its recent local high of $0.45.