The most loyal investors of Cardano are going against the trend of typical profit-taking, persistently increasing their holdings of ADA even as prices and market heat indicators rise.
Data from Alpharactal indicates that the long-term holder (LTH) group of ADA has been continuously accumulating this asset since 2021 without any significant signs of distribution. This stability reflects a strong belief in the long-term growth potential of Cardano, as well as a willingness to hold through volatile periods.
Part of the reason for this resilience comes from the fact that ADA's price is still 70% lower than its historical peak of $3.09 in September 2021. For many investors who bought during that cycle, the motivation to sell is not strong enough until the price returns to this record level.
In contrast, the short-term holder (STH) group of ADA is exhibiting surprisingly cautious behavior in the bullish market. While in 2021 they quickly took profits when prices surged, currently, despite a 150% increase compared to the same period last year, this group is reducing selling pressure and even slightly increasing their holdings.
A hot market and breakout prospects
In addition to investor behavior, on-chain indicators show that the ADA market is in a 'hot' state and may be preparing for a strong price surge.
The adjusted Sharpe ratio – a measure of returns versus risk – is currently around 1, indicating that market performance is outperforming previous cycles. Historically, ADA often experiences parabolic price increases when this ratio approaches 2, raising expectations for the next upward momentum.
Moreover, a significant stimulating factor may come from the legal side. Data from the decentralized prediction platform Polymarket shows that Cardano has an 80% chance of ETF approval in the US this year, placing ADA in a small group of altcoins with such a high probability.
If the ETF is approved, ADA could attract significant demand from both institutional and individual investors, contributing to pushing this cryptocurrency's value higher.