According to U.Today, Cardano (ADA), currently the 10th largest cryptocurrency by market capitalization, may be significantly undervalued, as suggested by a key metric known as the 'percentage of supply in profit'. This metric is determined by comparing the acquisition price of each unit of cryptocurrency against its current price, and then assessing what proportion of the supply is currently in profit. A high supply-to-profit ratio typically indicates that most holders bought the asset at lower prices.
These ratios can surge during bull markets, such as from October 2023 to March 2024, and a surge is often associated with overbought indicators. However, the supply-in-profit percentage indicator is most effective when used in conjunction with other metrics, like whale accumulation and MVRV. On-chain analytics firm Santiment recently shared the supply-in-profit percentages for major cryptocurrencies Bitcoin, Ethereum, XRP, Cardano, Dogecoin, and Chainlink as 89.9%, 84%, 77%, 51.9%, 76.7%, and 78.2%, respectively.
Santiment suggests monitoring cryptocurrencies with lower-end supply in profits, as they can often indicate undervaluation compared to the rest of the markets. This could apply to Cardano, which is showing a lower supply in percentage compared to other major cryptocurrencies. The supply-in-profit percentage presented suggests that 51.9% of circulating ADA is 'in profit.' This could indicate a potential price rebound for Cardano. At the time of writing, Cardano was down 3% in the last 24 hours to $0.453 and down 6.52% in the last seven days. Cardano is also significantly below its all-time high, down 85.38% from the ATH of $3.10 reached on Sept. 2, 2021.
Recent analysis from on-chain analytics firm IntoTheBlock indicates that ADA 'stands out' among other Layer 1 networks, with only 35% of holders in profit. Whether this is an opportunity or a warning sign remains to be seen.