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In a recent analysis by on-chain analytics firm IntoTheBlock on X, the Cardano network has been highlighted for its impressive on-chain volume.
The data reveals that Cardano settles approximately $7.2 billion daily in on-chain volume, a figure that surpasses many other blockchain networks. This substantial volume showcases the utility of the Cardano network.
However, this impressive on-chain volume yields an impressively low NVT ratio of just 2.62, which could indicate ADA is undervalued.
Cardano’s number of addresses with a balance has hovered around 4.45 million for over a year. Here's what's going on👇
— IntoTheBlock (@intotheblock) August 13, 2024
During the last cycle, Cardano experienced significant growth, positioned as a strong alternative to Ethereum. However, in the current cycle, the network faces… pic.twitter.com/WJrnAP8FQZ
Network Value to Transaction (NVT) is a ratio of market capitalization divided by transferred volume that can be used to determine if a coin is overvalued or undervalued. It draws from the basis that the price correlates with overall network usage.
A very low NVT ratio might suggest that ADA is very much undervalued, indicating it might be trading below its true market value.
At the time of writing, Cardano's native cryptocurrency, ADA, was trading at $0.334, far less than Ethereum and Solana's current valuation of $2,637 and $145, respectively.
The ADA coin remains down 89.2% from its all-time high of $3.10, reached three years ago (September 2021). ADA failed to hit an all-time high in this year's market boom, which had propelled BTC to roughly $74,000 in mid-March.
However, the percentage of ADA held by long-term holders has reached an all-time high, accounting for about 40% of the total supply. This long-term holding trend demonstrates a significant level of confidence on the part of ADA holders.
Cardano seeing stable transaction count despite decrease in new users
However, Cardano is seeing a slowdown in new users, with its number of addresses with a balance hovering around 4.45 million for over a year.
Cardano had substantial growth during the last cycle, positioning itself as a viable alternative to Ethereum. However, in this cycle, the network suffers difficulties in attracting new users, with much of the focus shifting to platforms such as Solana and Base.
According to IntoTheBlock, despite a slowdown in new users, the network's transaction count and active user base have stayed consistent since April, demonstrating a committed community that is still engaged with the protocol.