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Cardano Carries Less Risks Than Ethereum or BNB, Here's Why

Thu, 08/25/2022 - 09:58
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Gamza Khanzadaev
On-chain metrics indicate lower risk of further downside for ADA
Cardano Carries Less Risks Than Ethereum or BNB, Here's Why
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According to on-chain analytics firm Santiment, the risk of further declines in Cardano (ADA) quotes are now much lower than those of Ethereum (ETH) or BNB. This thesis on Cardano is built on the MVRV metric. As a ratio of market capitalization to realized capitalization, MVRV is used to understand when the price is above or below fair value, as well as to evaluate profitability.

Thus, according to Santiment, the MVRV of ADA is now in such a low zone that the risk of further decline is extremely small. This is especially true against the backdrop of ETH and BNB, which have not yet fallen as much as the MVRV ratio.

📊 30-day trading returns continue to point to mid-term losses for the average portfolio. The further into negative territory an asset's MVRV, the lower the risk of further downside, based on backtests. $ADA is notably low compared to other top caps.

— Santiment (@santimentfeed) August 25, 2022

Of course, the crypto market is unpredictable and risky, but this kind of on-chain analysis can be a great help in making investment decisions.

Cardano (ADA) price review

The ADA price has been stomping around for a week, after a downfall that started on Aug. 17 and stopped on Aug. 19. If you look at the picture in the context of the last four months, you can see how the quotes froze in the middle of the price corridor of $0.4-$0.6.

Source: TradingView

On the one hand, there is still room for a fall, and it is not good to open positions in the middle of the range. On the other hand, ADA showed a more than 30% growth at the beginning of June from approximately the same level of $0.465.

Maybe the best solution is not to follow Cardano's price at the moment, but the Vasil hard fork event, which in a lucky scenario will be able to pull the quotations of the cryptocurrency up.

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About the author

Financial analyst, trader and crypto enthusiast.

Gamza graduated with a degree in finance and credit with a specialization in securities and financial derivatives. He then also completed a master's program in banking and asset management.

He wants to have a hand in covering economic and fintech topics, as well as educate more people about cryptocurrencies and blockchain.