Cardano (ADA) recently experienced a decline in its MVRV ratio, a phenomenon that has historically led to significant price growth. The well-known market expert Ali Martinez drew attention to this development, highlighting its importance as a bullish indicator for Cardano during the current market downturn. It should be noted that ADA has been negatively affected by the broader cryptocurrency market crash, with a 20% decrease since April 12.
The troubles for Cardano began on April 9, following a period of sustained price growth that saw it reach the $0.62 price level. However, after reaching this high, ADA’s price collapsed as the overall market faced turbulence, resulting in a loss of key support levels from $0.62 to $0.59.
During the two days following this sharp decline, Cardano consolidated before experiencing an even steeper drop on April 12 and 13. It was during this period of downturn that its Market Value to Realized Value (MVRV) ratio suffered a significant crash.
For those unfamiliar with the term, the MVRV ratio compares the market value of a cryptocurrency to its realized value. Essentially, it helps determine whether a cryptocurrency is overvalued or undervalued based on its current price compared to its actual worth.
Data from Santiment, highlighted by Ali Martinez, shows that Cardano’s MVRV ratio recently dropped to -22.08 as market turbulence continues. A ratio of -22 suggests that ADA’s current market value is significantly lower than its realized value, indicating that it may be undervalued.
What is particularly interesting is the pattern observed on the charts whenever Cardano experiences a significant drop in its MVRV ratio. In June of last year, ADA’s MVRV ratio also crashed to -22 when the price declined by 41.6% from $0.3773 on June 3, 2023, to a low of $0.2200 on June 10, 2023.
Following this drop in the MVRV ratio, Cardano saw an impressive price increase, appreciating by 75% to over $0.37 in July 2023. However, it took over a month for this surge to materialize amid sustained growth. Ali Martinez expects this pattern to repeat, anticipating another significant rebound.
At its current price of $0.4656, Cardano could potentially reach $0.8149 with a 75% surge. This would be a two-year high for ADA, as the last time it reached this projected price was in May 2022. However, Cardano would need to overcome multiple resistance levels, with the final one located at the March 14 high of $0.8090.
According to data from IntoTheBlock, Cardano faces two significant sell walls before reaching the $0.81 price level. The first sell wall is between $0.5238 and $0.6007, with 355,100 addresses holding 4.49 billion ADA. The second sell wall is within the range of $0.6007 to $0.7268, featuring 336,990 addresses with a balance of 6.72 billion ADA.
Despite these substantial resistance levels, Ali Martinez’s vision for Cardano extends beyond $0.81. Last week, the analyst reiterated his belief that Cardano could reach $9 despite the current downturn. Additionally, media personality Jake Gagain predicted last month that ADA could reach $7.5.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. The views expressed in this article are solely the author’s opinions and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses incurred.