Cardano has recently faced a period of stagnation with its native token ADA trading predominantly between $0.35 and $0.45 since the August 5 drop.

Although ADA has recovered from a low of around $0.29 on August 5 to the current price of $0.34, it is yet to embark on a significant bullish streak, leading to concerns among investors about its growth trajectory.

Despite this, Cardano’s robust on-chain activity and the enduring confidence of its long-term holders present a more nuanced picture of the network’s current state.

On-chain performance and market valuation

Cardano has demonstrated impressive on-chain performance, processing approximately $7.2 billion in transactions daily according to data from the IntoTheBlock.

This substantial transaction volume highlights the network’s utility and efficiency, often surpassing many of its competitors.

However, despite this impressive on-chain volume, ADA’s Network Value to Transaction (NVT) ratio stands at a remarkably low 2.62.

The NVT ratio, which compares market capitalization to transaction volume, suggests that ADA might be undervalued relative to its actual network usage.

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Cardano’s NVT ratio indicates a potential undervaluation of ADA, as a low ratio often points to a disconnect between the token’s market price and its utility.

At present, ADA is trading significantly lower than its competitors, Ethereum and Solana, which are valued at $2,637 and $145, respectively.

ADA’s price is also down approximately 89.2% from its all-time high of $3.10 reached in September 2021.

However, the percentage of ADA held by long-term holders has reached an all-time high of 40% of the total supply, demonstrating substantial confidence from its investors.

Cardano facing steep competition from peers

Cardano faces significant competition from other blockchain platforms such as Solana and Base. Solana, in particular, has seen a substantial increase in active addresses, with new user adoption growing nearly fourfold in 2024.

This heightened interest in competing networks has led to a slowdown in Cardano’s user base growth, which has remained stagnant at around 4.45 million addresses with ADA balances for over a year.

Furthermore, Cardano’s development activity has experienced a notable decline. Data indicates that Cardano’s code commits fell by 74.5% in August 2024 compared to the previous month.

In contrast, Ethereum has seen a 14% increase in development activity, highlighting a relative decline in Cardano’s development momentum.

The long-term outlook for ADA

While Cardano’s ADA token has struggled with price stagnation and competitive pressures, its impressive on-chain performance and the confidence of long-term holders provide a foundation for potential future growth.

The network’s ability to maintain substantial transaction volumes and active user engagement amidst a challenging market environment highlights its underlying strength.

Looking ahead, there are positive forecasts for ADA. Some predictions suggest that ADA could reach $1 by 2024, representing a potential increase of 222.86% from its current levels.

This optimism is supported by technical analyses indicating possible price recoveries, including bullish patterns and a reversal from the oversold zone as reflected by the Relative Strength Index (RSI).

As the year progresses, Cardano’s prospects for improvement remain a topic of interest and speculation in the cryptocurrency community.

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