The 10th largest cryptocurrency by market cap Cardano (ADA) may be worth keeping an eye on with a benchmark that suggests it may be significantly undervalued. An important indicator that indicates ADA is undervalued is the “percentage of supply at profit” metric.
Percentage of supply at profit, each crypto- It is calculated by comparing the purchase price of the unit to its current price and then assessing how much of the supply is currently at profit. When an asset has a high supply-to-profit ratio, it usually indicates that the majority of asset owners are purchasing the asset at lower prices.
These rates can rise rapidly during bull markets, for example from October 2023 to March 2024, and this increase is often associated with overbought indicators. However, the supply-to-profit percentage indicator is best used in conjunction with other metrics such as whale accumulation and MVRV.
On-chain analysis firm Santiment, in a recent tweet, reported supply-profit percentages for major cryptocurrencies Bitcoin, Ethereum, XRP, Cardano, Dogecoin and Chainlink as 89.9%, 84%, 77%, 51.9% respectively. , 76.7% and 78.2% shared.
🤑 The percentage of supply in profit is calculated by comparing the acquisition price of each unit of #crypto against its current price, followed by determining what ratio of the supply is currently in profit.
Typically, when an asset is seeing a high ratio of supply in profit,… pic.twitter.com/oRzTABgznh
NEWS CONTINUES BELOW— Santiment (@santimentfeed) April 26, 2024
As Koinfinans.com reported, Santiment recommends keeping an eye on cryptocurrencies with lower-end supply in the profit, as this can often indicate undervaluation compared to the rest of the markets. This may be the case for Cardano, which shows a lower supply in percentage terms compared to other major cryptocurrencies.
The percentage of supply at profit offered shows that 51.9% of ADA in circulation is “at profit”. This may indicate an upcoming price reversal for Cardano. At the time of writing, Cardano is down 3% in the last 24 hours to $0.453 and is down 6.52% in the last seven days.
Cardano is also well away from its all-time high, down 85.38% from its ATH of $3.10 reached on September 2, 2021. Recent analysis by on-chain analytics firm IntoTheBlock shows that ADA “stands out” among other Layer 1 networks, with only 35% of its owners in profit. It is unknown whether this is an opportunity or a warning sign.
