Identifying if Cardano [ADA] is still worth buying
Cardano’s ADA went through quite a challenging and FUD-filled week recently. The cryptocurrency had started gaining some upside after weeks of subdued performance. However, the FUD around a bug found on its testnet weighed heavily on ADA, in addition to the bearish conditions last week.
ADA tanked by roughly 25% during the week as a consequence of the aforementioned factors. While the FUD revolved around some testnet issues, it did not have a direct impact on Cardano’s mainnet. The latter is still on track to launch its next major upgrade named Vasil. However, delay concerns may have also contributed to ADA’s downside.
ADA’s latest downside might turn out to be an opportunity though. This, because it presents an opportunity to buy at a discount, especially after last week’s crash.
Now, is there a chance of more downside? Well, ADA’s price action still has some room for downside before reaching the next support zone.
ADA’s $0.46 press time price came on the back of a slight uptick over the last 2 days. In fact, this uptick came as a relief from last week’s sell-off. However, there is still some uncertainty regarding its next move as investors contemplate whether it will resume its downside or achieve bullish recovery.
Following the smart money
Imitating whales and institutional investors in times of uncertainty is often a smart idea. ADA’s whale transaction metrics registered significant whale activity in the last 2 days.
There were as many as 43 whale transactions worth more than $100,000 and at least 10 whale transactions worth more than $1 million on Saturday morning.
Now, whale transactions did see a significant dip in the last 24 hours. However, the large transactions in the last 2 days occurred after ADA was already down by a significant margin. It would be uncharacteristic of whales to sell when the price is already down. Hence, the latest activity suggests that the whales are buying the dip.
ADA’s net realized loss dropped from as low as -1.3 million ADA to its press time level of -13,988 ADA. This confirmed that there was strong accumulation after the dip.
This outcome was also confirmed by a major spike in ADA’s stock to flow ratio. The latter increased from 8.12 on Saturday to 145.29 at press time. It also projected an increase in scarcity. Ergo, greater demand at its press time level would result in higher prices.
ADA’s realized cap metric also suggested that most of the investors that bought the dip are still not in profit. It also underlined that there is still not enough bullish volume to push the price back up.
This is a sign that most of the liquidity is yet to flow back into ADA. Large investors are still waiting to see if the sell-off is over, but the cryptocurrency is trading within its lower range.