This week, IntoTheBlock takes a look at what is going on with Cardano.
Every week, IntoTheBlock brings you on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry.
A Look at Cardano’s Key Metrics
In the past week the renowned smart contract platform Cardano has been experiencing significant positive price action. It’s native token ADA had its price closing in on the $3 mark during Monday 23rd making it the third biggest crypto currency ranked by market cap.
Much speculation and volatility has been seen around the token since the development team announced the launch of the Alonzo hard fork. The highly-awaited fork is expected to deploy smart contracts onto Cardano’s mainnet. This will allow developers to build applications on top of the Cardano platform, creating its own ecosystem.
In this article we will explore key metrics about Cardano’s recent price fluctuations and what effect it had on our indicators. We will also cover important aspects about the Alonzo Fork and how this could shape the token’s future.
The Search Trends indicator, as the name describes it, shows trends in google searches over the last 90 days in relation with price of the token. Google shows this chart on a relative basis with a max score of 100 on the day that had the most google searches for that keyword.
This helps to show the relation and importance of google searches which could mark “trends in culture” with the direct effect it has over the price of a specific token. Some tokens are affected more than others by this type of activity. In this example we can see how on May 25th searches for the word “Cardano” were at a score of 54, while on August 20th right before the token’s all time high on August 23rd the searches were at a score of 100.
With its growing popularity is also worth having a look at the investment profitability of the token current holders.
For any address with a balance of tokens, IntoTheBlock identifies the average price (cost) at which those tokens were purchased and compares its current price. If Current Price is greater than Average Cost, address is “In the Money.” If Current Price is less than Average Cost, address is “Out of the Money.”
The indicator shows that 97% of the addresses are currently “In The Money”, meaning they are profiting on paper. In addition it depicts that there was great amounts of activity between the range of $1.68 to $2.24.This stands as a sign of support since 307.2k addresses traded around this price with an approximate of 5.12 billion ADA in volume. Having 97% of the addresses at profit is also a positive sign since most of these addresses will not be seen into a position of pressure selling. It's also worth mentioning the high correlation ADA currently holds with BTC. While this range may appear as a clear support for the token, since we are still in the early stages of the evolving crypto space most tokens still have a high correlation to BTC, meaning that if Bitcoin’s price drops significantly Cardano is likely to follow suit.
In addition, another interesting trend to keep an eye on are the perpetual swaps contracts since this provides insights of trading activity and positioning of the market.
This indicator depicts the volume traded of perpetual swaps contracts on the top centralized exchanges. Total volume is calculated by multiplying the total number of contracts traded times the dollar value of each.
This indicator is a great way to measure increasing trading activity and volatility. On Monday August 23rd, the indicator recorded a total of $11.24 billion traded on perpetual swaps contracts. Pointing to the high trading activity experienced over the ADA token which took the price near the $3 value reaching its all time high of $2.95, with an impressive market cap of nearly $100 billion ranking as the 3rd biggest token by market cap after Bitcoin and Ethereum.
Finally, one important indicator that highlights the overview of the current state of the Cardano token is the ownership distribution by time held. This indicator groups the token holders based on how long their addresses have managed to hold the token. Hodlers are passive investors that have held the asset for more than 1 year, Cruisers have a holding period of 1 to 12 months, while Traders hold the asset for less than 30 days.
The indicator shows that its great majority of token holdings, about 74%, belong to the cruisers category. This category stands for the addresses that have held the coin for a period of 1 to 12 months usually being a group that those not have created attachment and familiarity with the core concepts that make up this development. This suggests that these addresses could be tempted to take profits in a shorter time span in comparison to the hodlers, which have a longer and more passive perspective. It's also worth mentioning that the hodlers category has been increasing during the past months, showing an increase of 0.83% since the month of May.
Currently Cardano is getting ready to deploy the smart contracts, in the Alonzo Fork, bringing the network closer to its full capabilities and goals, also marking the end to Shelley era on its roadmap and the beginning of the Goguen era. The fork currently on testnet is scheduled to be realized to the public in this third quarter. This major fork will pave the way for decentralized apps to start deploying smart contracts onto the network and begin building the Cardano ecosystem. As an important milestone and significant step dapps will start to develop, combined with Cardano’s impressive current momentum it will be an important developing ecosystem to keep an eye on.
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