- Cardano has recorded a high ratio of the volume of on-chain transactions in profit in the past few weeks
- On-chain data revealed the altcoin is not well-primed for a price rally
Cardano [ADA] has seen its ratio of on-chain transaction volume in profit to loss spike in the past few weeks, as per data from Santiment. This metric stood at 0.848 at press time, meaning ADA profit-taking transactions happened almost twice as fast as loss-taking transactions.
According to Sanbase, this on-chain metric tracks the aggregate amount of coins/tokens across all transactions on the network that moved in profit or loss for a given asset in an interval. It also shows the ratio between transaction volume in profit and transaction volume in loss.
Towards the beginning of July, ADA’s ratio of on-chain transaction volume in profit to loss rallied to a high of 1.54. The last time the indicator surged this high was two months ago.
While the ongoing growth of this metric meant that many ADA traders logged profits on their transactions, a price correction might follow when so many traders are only moving their coins when in profit, with only a few recording losses.
To gear up for a price correction or not
Trading at $0.2942 at press time, ADA’s value declined by 22% over the last 30 days, according to CoinMarketCap. A look at the alt’s social activity on-chain revealed that the price dip in the beginning of July coincided with a fall in ADA’s social dominance and social volume.
A fall in these metrics often indicates shifting market sentiments, decreased interest in an asset, or a temporary lull in its popularity, often accompanied by a fall in price. Therefore, for ADA’s price to correct upwards, its social activity has to improve considerably.
However, caution is advised, as when an asset’s social dominance and social volume surge to hysteric levels, a price decline inevitably follows.
How much are 1,10,100 ADAs worth today?
The past month has also been marked by a decline in ADA’s network activity. According to data from Santiment, the count of daily active addresses that traded the altcoin in the last 30 days fell by 71%.
It is trite that the growth in an asset’s price and growth in its network activity are closely related. Hence, for ADA to register any significant positive price correction, network activity must also grow.
More importantly, ADA’s weighted sentiment must return to positive territory for any of this to happen. In fact, according to Santiment, since 9 June, the alt’s weighted sentiment has recorded negative values. At the time of writing, this flashed a figure of -1.113.
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