While Cardano’s price has seen a rather dark 2022, there are good reasons to be bullish on ADA now, according to Santiment on-chain data. In addition, while the high of $3.09 from September 2, 2021 is still -88.28%, the annual rally of more than 45% has created new hopes.
The technical development of Cardano by IOG continues to be actively driven. Today, Valentine’s Day, February 14, Cardano will implement a new software upgrade.
“Valentine” is intended to enable secure on-chain interactions and blockchain interoperability through cross-chain dApp development on the Plutus platform. This strong fundamental reason is also reflected in the on-chain data, as Santiment’s latest research shows.
Big investors put money in Cardano (ADA)
According to the on-chain analytics company, transactions by large investors on the Cardano network are a good sign. The number of ADA whale transactions has increased since the beginning of February.
“There is suddenly an average of about 1,700 transactions per day worth $100k or more. This is a big uptick from the approximately 300 $100k+ transactions per day that happened in January,” explained Santiment, showing the chart below.
But smaller addresses also collect ADA in large numbers. Since FTX collapsed on November 9th, addresses of whales and sharks holding 10,000 to 10 million ADA have collected 659.53 million ADA, or about $235.5 million. As Santiment notes, this change in Cardano’s main players is a very good sign.
Also bullish is that average trader returns are in negative territory. As the analysis company emphasizes, investors should enter positions when there is “blood on the road”. As Santiment discusses, now may be a good time to enter a long position:
And based on the two-week price correction, as well as the 2022 decline that ADA still hasn’t completed, there is a lower risk to buy now than the average time in Cardano’s history.
Bearish On-Chain Indicator for ADA
However, there are also bearish metrics that ADA investors should pay attention to. Thus, the activity in the network is relatively low at the moment.
According to Santiment’s Mean Dollar Invested Age metric, large investments in coins on the Cardano network continue to sit without much movement. Six months ago, the average time a coin had at an address was 267 days. This number has ballooned to 407 days.
This trend is also confirmed by daily active address metrics. “We saw some encouraging increases in the number of unique daily addresses interacting on the ADA network. But after seeing 85,000 addresses transfer to Cardano per day in November, that number has decreased to 62,000 addresses per day now.
In summary, Santiment stated that there are more reasons to be “happy” than to worry today. The fact that the sentiment among traders towards ADA is somewhat negative at the moment is also a good sign that the price increase may surprise the ADA community.
At press time, the price of ADA stood at $0.3609 and was rejected at the EMA 200 on the 4-hour chart, which is now a resistance.
Featured image from Kanchanara / Unsplash, Chart from TradingView.com