Cardano: What next for ADA as small holders surrender to whales

• There has been a decline in the number of addresses holding ADA.
• This meant that small holders were selling to whales at a loss. 

Cardano [ADA] has experienced a decline in the total number of addresses holding the coin in the past three days, Santiment noted in a post on social media platform X.

According to the data provider, this decrease suggests a decline in coin ownership by small investors, indicating a shift in ADA ownership dynamics.

Santiment said,

“Typically, declining wallets is a sign of small holders capitulating & selling to whales at a loss.” 

Most Cardano holders remain at a loss

Although ADA’s value has risen by double digits in the last month, many of its holders remain underwater. An assessment of the altcoin’s Market Value to Realized Value (MVRV) ratio showed that the metric has been less than one since March 2022.

The MVRV ratio tracks the ratio between an asset’s current market price and the average price of every coin or token of that asset acquired.

A positive MVRV ratio above one signals that an asset is overvalued, and selling at the current price would result in profits for investors.

Conversely, a negative MVRV value shows that the asset in question is undervalued. If holders sold at the asset’s current price, they would realize losses. 

Although there was an uptrend in ADA’s MVRV ratio, it remains below one and continues to post only negative values. 

At press time, ADA’s MVRV ratio was -17.41%. This meant that, on average, investors who purchased the asset in the past held the coin at a 17.41% loss. 

Source: Santiment

Bullish sentiment persists

Although most ADA investors hold the coin below their cost basis, its futures open interest has almost doubled since the 1st of November. At $206 million as of this writing, ADA’s open interest has grown by 63% since then.

It is trite that a steady increase in an asset’s open interest means that investors are entering more trading positions. It is often taken as a bullish signal.

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Likewise, the coin’s funding rates across exchanges have been positive since the end of October. 

A combination of positive funding rates and a rising open interest highlights the bullish sentiment in the ADA market. This is despite the low profits recorded on transactions involving the coin.