Is Cardano (ADA) Undervalued or Headed for a Deeper Decline?

Cardano (ADA) has entered an “Extreme Buy” zone, with its Market Value to Realized Value (MVRV) ratio dropping amid persistent market volatility.

However, emerging conflicting signals are creating a challenging environment for investors, as technical indicators point to the possibility of further downside.

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On-Chain Data Shows Undervaluation and Adoption

Analytics platform Santiment noted that the majority of top cryptocurrencies are now showing sharp negative returns among traders. Cardano investors are experiencing some of the deepest losses in the market. On-chain data indicates that the 30-day MVRV ratio has slipped to -19.7%.

MVRV is a key metric that measures whether a cryptocurrency is overvalued or undervalued by comparing its current market value to the realized value. When the MVRV ratio exceeds 1, most holders are in profit, often indicating an overheated market with a higher risk of corrections.

When the ratio drops below 1, holders are on average at a loss, marking undervalued periods. The latest drawdown has pushed ADA into what Santiment classifies as an “Extreme Buy Zone”, a level that often precedes market recoveries.

“In a zero sum game, buy assets when average trade returns of your peers are in extreme negatives. The lower MVRV’s go, the higher the probability is of a rapid recovery,” Santiment wrote.

At the same time, Cardano’s fundamental growth is steady. TapTools reported that the number of Cardano holders has exceeded 3.17 million. Furthermore, investors have purchased 348 million altcoins in early November.

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Meanwhile, Alphractal, a market intelligence firm, pointed out that public interest in the crypto sector has dipped to its lowest since June. According to their analysis, such patterns have frequently preceded notable opportunities.

“When Bitcoin and crypto prices fall, people lose motivation fast. Searches go down, curiosity fades, and topics like exchanges, altcoins, and market trends practically disappear from the radar. And what usually brings the interest back? Volatility. And, let’s be honest — prices moving up,” Alphractal posted.

Is ADA Positioned For Further Declines?

Despite this, the recent price performance suggests a more cautious outlook. The token has fallen 25.6% over the last month, and the sell-off has pushed Cardano below a key yearly support zone.

The $0.50 level, a price area that has served as a structural anchor since November 2024, has now been breached. ADA is currently trading near $0.46, down 4.72% over the past 24 hours.

Moreover, analysts warn that the next major downside target could be in the $0.30 region.

Ultimately, whether Cardano marks a major buying opportunity depends on one’s risk tolerance and investment timeline. The convergence of undervaluation signals and on-chain growth supports a bullish long-term case. However, technical factors call for a cautious approach.