Analyzing Cryptocurrency Undervaluation: Supply in Profit Metrics
Table of contents
Understanding Supply in Profit Metrics
The percentage of supply in profit is calculated by comparing the acquisition price of each unit of cryptocurrency against its current price, revealing what portion of the supply is currently in profit. High supply-to-profit ratios typically indicate that most holders purchased the asset at lower prices, particularly during bullish market cycles.
Key Insights from Santiment's Tweet
Santiment's tweet shares the supply-in-profit percentages for major cryptocurrencies like Bitcoin, Ethereum, XRP, Cardano, Dogecoin, and Chainlink. Notably, Cardano's supply-in-profit percentage stands at 51.9%, suggesting potential undervaluation compared to other major cryptocurrencies.
Implications for Cardano (ADA)
The lower supply-in-profit percentage for Cardano hints at a possible price comeback for the cryptocurrency. Despite recent price fluctuations, Cardano's market dynamics indicate room for growth, with only 35% of holders currently in profit, according to analysis from on-chain analytics firm IntoTheBlock.
Conclusion
Understanding supply in profit metrics provides valuable insights into cryptocurrency valuation and market dynamics. Santiment's data highlights potential undervaluation opportunities, particularly for cryptocurrencies like Cardano, inviting investors to monitor these metrics alongside other indicators for comprehensive market analysis.