Cardano signals an imminent breakout of 75%, ADA records a drop in MVRV ratio

Recently, Cardano (ADA) has seen a decline in its MVRV ratio, a phenomenon that usually follows impressive price growth. Market veteran Ali Martinez drew public attention to this latest development, affirming that it is a bullish indicator for Cardano amid the current market downturn. Notably, ADA has fallen victim to the entire crypto market crash, dropping 20% since April 12.

Cardano’s woes began on April 9, when it posted a series of gains to recapture the $0.62 price range. Following this high, ADA’s price collapsed as the entire market faced turmoil, ultimately abandoning key support levels from $0.62 to $0.59.

Cardano MVRV ratio drops

Cardano consolidated for two days following this sharp drop before seeing even bigger declines on April 12 and 13. During this downturn, its market value to revenue (MVRV) ratio suffered a major collapse.

For the uninitiated, the MVRV ratio compares a cryptocurrency’s market value to its realized value. Basically, it helps to assess whether the current price of a cryptocurrency is too high or too low relative to its actual value.

Data from Santiment cited by Ali shows that Cardano’s MVRV ratio recently dropped to -22.08 as market volatility persists. An MVRV ratio of -22 means that ADA’s current market cap is well below its realized value, indicating that it may be undervalued.

What’s more, Ali observed an interesting pattern on the chart where whenever Cardano’s MVRV ratio dropped significantly, ADA’s MVRV ratio also dropped to -22. Specifically, in June 2023, ADA experienced a sharp decline of 41.6% from $0.3773 on June 3 to a low of $0.2200 on June 10, with the MVRV ratio of ADA also falling to -22.

Following the decline in the MVRV ratio, Cardano has achieved an impressive price increase, growing by 75% from above $0.37 in July 2023. However, this 75% increase would require sustained growth over a period of more than one month to achieve. Ali expects the pattern to repeat and looks forward to what he called "another impressive rally."

A possible rebound is coming

At its current price of $0.4656, Cardano could reach $0.8149 with a 75% growth. This would be a 2-year high for ADA as the last time the expected price level was reached was in May 2022. Cardano needs to break through multiple resistance levels to reach this target, the last of which is located at the March 14 high of $0.8090.

According to data from IntoTheBlock, Cardano has two huge sell order walls before the $0.81 price level. One of the sell wall is located between $0.5238 and $0.6007, with 355,100 addresses holding 4.49 billion ADA. The second sell wall is located between $0.6007 and $0.7268, with 336,990 addresses holding 6.72 billion ADA.

Ali’s view on Cardano surpassing the $0.81 level is strong despite the huge resistance. Last week, the analyst again said 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 content is for informational purposes only and should not be considered financial advice. The opinions expressed in this article may contain the personal opinions of the author and do not reflect the views of The Crypto Basic. Readers are encouraged to perform thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.