- Cardano has the highest Nakamoto co-efficient among all chains, indicating higher levels of decentralization
- Sentiment around ADA remained unaffected though as prices fell
Over the past few months, there have been many areas where Cardano[ADA] has not been able to compete with other Layer 1s. However, there is one area where Cardano’s dominance has been unparalleled.
Will decentralization bring users to the yard?
According to recent findings, Cardano now has a higher Nakamoto co-efficient than the market’s other altcoins – A sign of high decentralization. The Nakamoto coefficient is a metric used to estimate the number of entities required to control 51% of a blockchain’s hashrate. A higher Nakamoto coefficient indicates a more decentralized network.
This means that the Cardano network cannot be influenced by a few large entities that dominate most of the network. A high Nakamoto coefficient can improve sentiment among crypto-enthusiasts and attract more users to the network.
Source: EDI
However, the Nakamoto coefficient wasn’t enough to get addresses to buy ADA. Over the past week, for instance, the price of ADA fell by 3.82%. At the time of writing, it was trading at $0.4503. The crypto’s trading volumes fell by over 3.82% over the same period too.
Even though ADA addresses are holding the tokens of one of the most decentralized networks, most of them remain unprofitable. This was revealed by AMBCrypto’s analysis of Santiment’s data which indicated a negative MVRV ratio for the network. Moreover, the data also showed that the Long/Short difference has been declining – A sign that the number of long-term holders of ADA have been falling.
The prevalence of short-term holders could impact ADA negatively as these holders are much more prone to sell their holdings amidst market volatility.
Source: Santiment
How are traders doing?
Bulls bore the brunt of these declining prices over the last few days. In fact, Coinglass data revealed that the number of longs liquidated grew significantly over the past week. In the last 24 hours alone, long liquidations for ADA amounted to $99,870.
Source: Coinglass
Due to these factors, the sentiment around ADA turned skeptical. Most traders turned bearish over the last few days, which was reflected in the percentage of short positions against ADA growing.
Since 1 May, the percentage of short positions against ADA has grown from 49% to 53.8%.
Realistic or not, here’s ADA’s market cap in BTC terms
Source: coinglass
