• Cardano’s MVRV ratio flipped negative, signaling that the average buyer is now at a loss
• Will HODLers stay firm in their conviction, or will market FUD force them to reconsider?

Despite a sharp 12.60% monthly decline, Cardano [ADA] remains 87% above its election-day opening price, outperforming many high-cap assets. This is a sign of strong holder conviction, with investors opting to sit on unrealized gains rather than exit their positions.

However, on-chain fundamentals seemed to paint a contrasting picture.

In fact, Cardano’s Total Value Locked (TVL) dropped below its pre-election levels, signaling liquidity outflows. Simultaneously, Whale Transaction Count (>100K USD) fell to a cycle low – Indicative of a fall in institutional activity.

Hence, to reignite FOMO in the market, ADA must confirm its support on the charts. Otherwise, with weakening fundamentals, even HODLers might waver, opting for capitulation over conviction.

Which side will prevail?

At the time of writing, the altcoin’s price chart highlighted a real test of patience.

Since February, it has posted three consecutive lower lows, breaking key support levels and signaling structural weakness.

The latest breakdown on 06 April saw ADA lose the $0.58-support – A level it had held post-election. This sparked concerns of a deeper correction, as profit margins compressed across the board.

This concern was reflected in the Market Value to Realized Value (MVRV) ratio, which flipped negative. It suggested that on average, recent ADA buyers are now underwater.

Here, it’s worth pointing out that ADA’s swift recovery did flip market sentiment. Trading at $0.6283 at press time, a 7% rebound may have restored confidence in a recovery.

However, is this rebound a result of a “market-wide” supply squeeze – A relief rally, perhaps? Or is HODLers’ confidence in a bull rally preventing Cardano from erasing all post-election gains?

Structural weakness threatens HODLers’ conviction

With every failed support, ADA holders face a critical decision – Hold strong or exit before deeper losses unfold. If MVRV stays negative and buying pressure weakens, capitulation could be next.

Simply put, the closer Cardano drifts to its election-day price, the more fragile investor confidence becomes. Without strong fundamentals to reinforce sentiment, a sell-off to breakeven levels could accelerate.

Encouragingly, trading volume on 07 April surged to $1.98 billion – Up from $941 million the previous day. Additionally, the whale cohort – holding 100 million to 1 billion ADA – accumulated 250 million ADA on 10 April alone.

Consequently, this whale-driven demand blindsided short-sellers, forcing $901k in liquidations. As shorts unwound, a 7% rebound followed, injecting fresh momentum. 

Bullish reversal, right? Not so fast.

Well, the largest whale cohort (12.6B ADA) has been sidelined, signaling caution. Plus, dormant whale circulation (180-day) spiked – A historical warning sign of market tops.

With previously idle coins entering circulation and accumulation remaining weak, selling pressure could intensify.

If ADA fails to hold above $0.58, structural weakness may escalate into full-scale capitulation.