Cardano’s Network Value to Transactions (NVT) ratio has recently spiked to its highest level since June, signaling a concerning trend: on-chain activity has slowed relative to ADA’s price growth.
This heightened NVT ratio is often viewed as a classic sign of overvaluation, and it’s particularly noteworthy in light of ADA’s recent underperformance. If on-chain engagement doesn’t pick up, Cardano’s price may face difficulty sustaining its current momentum, hinting at the possibility of further downside.
Cardano's NVT ratio has surged to its highest level since June, indicating a decrease in on-chain activity relative to price growth.
This classic overvaluation signal is notable given $ADA's recent underperformance, suggesting the potential for further downside.
Historically,… pic.twitter.com/yTx83exBXM
— IntoTheBlock (@intotheblock) October 29, 2024
Historically, elevated NVT ratios have often preceded price pullbacks, suggesting that ADA could be entering a similar phase. Analyst Ali Martinez points out that Cardano might be mirroring its 2020 pattern, which could offer insight into the token’s potential price trajectory. If history repeats, ADA may see a surge around November 18, approximately two weeks after the U.S. elections, with a potential peak forecasted by September 2025.
I believe #Cardano $ADA is following a similar pattern to 2020. If history repeats, we might see a pump around November 18—about two weeks after the US elections—and a potential market top by September 2025. pic.twitter.com/GgKWBqzYXU
— Ali (@ali_charts) October 29, 2024
The combination of a rising NVT ratio and waning on-chain engagement raises caution for ADA investors, as these factors typically indicate reduced demand relative to price. For Cardano to regain and maintain bullish momentum, an uptick in on-chain transactions and user engagement will be essential.
Without this support, ADA may struggle to keep pace with the broader market, despite anticipated cyclical patterns. As traders monitor the post-election period and watch for potential signals in on-chain activity, ADA holders are likely to face a pivotal period that could define the token’s performance in the months ahead.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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