Cardano (ADA), the 10th largest cryptocurrency by market capitalization, might be worth monitoring, as a key metric suggests it could be significantly undervalued. The “percentage of supply in profit” metric, which measures the proportion of the total supply that was acquired at a price lower than the current one, indicates potential undervaluation.
This metric is particularly informative because a high supply-to-profit ratio usually implies that most holders bought the asset at lower prices. During bull markets, such as the period from October 2023 to March 2024, these ratios can spike, often signaling overbought conditions. However, the supply-in-profit percentage is most useful when combined with other metrics, such as whale accumulation and the Market Value to Realized Value (MVRV) ratio.
According to a recent tweet by on-chain analytics firm Santiment, the supply-in-profit percentages for major cryptocurrencies are as follows: Bitcoin at 89.9%, Ethereum at 84%, XRP at 77%, Cardano at 51.9%, Dogecoin at 76.7%, and Chainlink at 78.2%. Santiment suggests that cryptocurrencies with lower supply-in-profit percentages, like Cardano, may be undervalued compared to others in the market.
The data shows that 51.9% of circulating ADA is currently “in profit,” which could signal an impending price recovery for Cardano. As of now, Cardano’s price has dropped 3% in the last 24 hours to $0.453 and 6.52% over the past week. It remains significantly below its all-time high of $3.10 reached on September 2, 2021, down 85.38%.
Furthermore, analysis from on-chain analytics firm IntoTheBlock highlights that only 35% of ADA holders are currently in profit, a notable figure among Layer 1 networks. Whether this indicates an investment opportunity or a potential risk is yet to be determined.
