Cardano surges past $1 mark, but pain remains

By: Dan Ashmore, CFA
Dan Ashmore, CFA
Dan is a Data Analyst at Invezz, combining quantitative skills and a macro background to compile analysis on a… read more.
on Mar 23, 2022
  • On-chain volume surges & TVL soars past $300 million
  • Cardano remains 65% down from last year's all-time-highs
  • Bagholders remain aplenty with only 27% of addresses in profit

Following an 11% surge over the last 24 hours, Cardano is back above $1. At a market cap of $36.4 billion, it is now the seventh biggest cryptocurrency, while the gain in the last seven days alone is a dizzying 33%.

Let’s dive into the price action, and the catalysts behind the surge.

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Decline

$1 is an important psychological number – look no further than the Dogecoin-to-$1 movement that has become one of the biggest memes in crypto. However, I think it’s fair to say that, for Cardano, the $1 mark doesn’t quite have the same celebratory feel. Indeed, $1 is still 65% below the all-time-high of $3.10 set in Sep-21.

Cardano price performance since all-time-high in Sep-21, Data via CoinMarketCap

The above chart contextualises the recent upward price move historically. As if it wasn’t clear already, it really underlines how overvalued Cardano was last year. Placing third in the crypto ranks behind only Ethereum and Bitcoin was simply not justifiable against what the crypto had achieved at that point, a fact the market realised in short order. A reputation of a high-achieving team, powerful partnerships and continued promises will only get you so far – eventually you actually need to deliver.

Looking at on-chain analytics below, a sombre 63% of Cardano addresses have entry points above the current price of $1.08, highlighting the scale of the decline from last year.

There is no shortage of Cardano bagholders, for lack of a better word. Data via IntoTheBlock

With Cardano’s rise once being the talk of the crypto world, as it rocketed up the third overall spot, a lot of investors made a lot of money very quickly. Looking at the addresses who are in profit over time paints the story of the decline, however – to where we are now, with only 27% of addresses in profit.

In-the-money vs out-of-the-money addresses: that sinister red area has really ramped up since September…

Positives

The bearish tide appears to be slowing, however, after the recent rise. The launch of the decentralised exchange SundaeSwap in late January, the environmental announcement of the planting of $1 million trees in February (remember, it’s not so long ago that Cardano’s proof-of-stake mechanism was the bellwether of the “green” crypto initiative) and the launch of Fund8 by Cardano Treasury are all positive developments for Cardano which have occurred this year.

Total Value Locked (TVL)

But more importantly, Cardano seems to eventually be delivering some actual utility. With the DeFi ecosystem now up and running, the TVL has been increasing impressively.  Ramping up from late January, this coincides with the launch of SundaeSwap, which has alone captured $124 million of TVL to date.

Total Cardano TVL now sits at $321 million, while the growth in TVL over the last week alone has been $110 million – the same period that the Cardano token has appreciated 33%. TVL in the last 24 hours has even jumped 11.5%. No doubt, it’s a really promising uptick.

Cardano TVL has shown impressive growth YTD, data via Defi Llama

Volume

In digging through on-chain metrics, the one that really stands out is volume. Presented below, one can see the volume from the start of 2021. Since the start of March, volume has gone vertical, breaching past previous highs set in Sep-21 – which, again, was when Cardano traded at its all-time-high. Increased volume alongside TVL going vertical – it’s a nice cocktail for any cryptocurrency.

Against this backdrop, it’s not surprising to see the bounce in price (black line on below graph) this month, even it is dwarfed by the vertical action we saw last year.

On-chain volume hits all-time-highs. Plotted alongside price, data via IntoTheBlock

Conclusion

It’s certainly been a rough time for diamond-handed Cardano holders over the last while. Even with the surge of this past month, most investors are still in the red. But with TVL ramping impressively and projects beginning to launch, there’s been some refuge recently.  

$1 may not seem much to celebrate when compared to the euphoric highs of last year, but at least people are talking about Cardano again. More importantly, there’s volume, TVL and utility being generated.

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