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Cardano (ADA) Stakers Lock in $30M in 5 Days – Bullish Price Signs?

3 mins
Updated by Ryan James
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In Brief

  • After the bulls fiercely defended the $0.25 support level, Cardano (ADA) price is showing early signs of a potential price rebound. 
  • On Aug 28, Cardano holders staked another 88 million ADA worth approximately $23 million, bringing the total percentage of ADA staked to 63.43%.
  • The MVRV ratio suggests that a successful rebound above $0.29 could catalyze a rally current toward the $0.40 range.
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After surviving a major scare at the $0.25 support level, the Cardano (ADA) price now shows early signs of a potential price rebound. On-chain indicators explore how a recent spike in ADA smart-contract staking could spark a price rally.

Ethereum Layer-2 scaling platforms like Base and Optimism (OP) have recently grabbed investor attention. However, the Cardano Layer-1 platform is showing no signs of letting up. Here’s how a recent spike in ADA staking could spark bullish momentum in the coming weeks. 

Cardano Holders Have Staked $50 Million in the Last 5 Days

Since the start of the month, Cardano staking has remained relatively flat, but that trend changed on August 28. With the ADA price sinking 43% below its 2023 peak of $0.46, most of the current ADA holders are now staring at unprecedented levels of unrealized losses. 

On-chain data shows that Cardano holders are now looking toward yield-bearing staking opportunities in response. 

The chart below shows a considerable increase in the supply of ADA staked across various DeFi protocols. Specifically, in the five trading days between August 24 and August 29, Cardano holders locked up another 117. million coins (0.53% of total circulation supply) in smart contracts. 

At the current market price of $0.26, the newly-staked tokens are worth approximately $30.6 million. 

Can Cardano (ADA) Staking Spark a Price Rally? | Total ADA Staking, Aug 2023.
Can Cardano (ADA) Staking Spark a Price Rally? | Total ADA Staking, Aug 2023, Source: Cardano Blockchain Insights

The Total Staked metric evaluates real-time changes in staking activity by estimating the percentage of the circulation supply currently locked up in smart contracts. 

Increased staking typically means a sizeable number of tokens has been temporarily removed from the market supply. This could spark a rapid price uptick when market demand grows. Unsurprisingly, amid the spike in staking, ADA price has already gained nearly 3% since August 23.

Notably, a considerable increase in staking during a price resurgence, as observed above, suggests that Cardano holders are targeting sizeable gains in the future rather than selling at the next milestone.  

Hence, the bulls could capitalize on this temporary decline in the ADA market supply to spark a price rebound mission above $0.30.

Current Holders Could Push For 35% Gains Before Selling

Furthermore, the Market Value to Realized Value (MVRV) ratio, which tracks ADA holders’ net financial position, confirms that they could hold out for a while longer. 

As shown in the MVRV chart below, most investors who bought ADA in the last 30 days could book losses of up to 11% if they sell now.

Can Cardano (ADA) Staking Spark a Price Rally? | MVRV, Aug 2023
Can Cardano (ADA) Staking Spark a Price Rally? | MVRV, Aug 2023 | Santiment

Historical trends suggest that the current investors will likely hold until they flip their 11% losses into 5% gains around $0.30. In summary, with Cardano currently hovering around the $0.26 range, if Cardano holders continue to move coins off exchanges for staking, it could spark a double-digit percentage price rally. 

ADA Price Prediction: Possible Rebound Toward $0.35

The indicators analyzed above suggest the uptick in Cardano staking could spark a price rally toward the $0.30 territory.

The In/Out of Money Around Price data, which depicts the entry price distribution of the current Cardano holders, also validates this prediction.  

It, however, highlights that Cardano’s price will face initial resistance around $0.28 territory. As shown below, the 39,720 addresses had bought 2 billion ADA at the average price of $0.28.

If they book early profits, it could spark an early bearish reversal. But if the bulls can push past that resistance, ADA price could promptly reclaim $0.30. 

Cardano (ADA) Price Prediction | IOMAP data, Aug 2023
Cardano (ADA) Price Prediction | IOMAP data, Aug 2023, Source: IntoTheBlock

Yet, the bears could invalidate that optimistic ADA price prediction if it drops below $0.25. However, 70,000 addresses had bought 515.5 million ADA coins at the minimum price of $0.25. But if the Cardano holders keep their coins staked, the support level could prove too strong for the bears.

Although unlikely, if that support level caves in, Cardano’s price could eventually drop below $0.23 for the first time in 2023.  

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Ibrahim Ajibade
Ibrahim Ajibade Ademolawa is an experienced On-chain research analyst who began his career in Commercial Banking. He has worked with several Web3 startups and financial institutions —analyzing technical concepts and spectacular events that link the DeFi and TradFi worlds. He holds a Bachelors’ Degree in Economics and is currently pursuing an MSc. in Blockchain & Distributed Ledger Technologies.