An accumulation spree is underway with regard to ADA (Cardano).
However, unlike Bitcoin and Ethereum, it is not whales that are accumulating ADA at this stage, but sharks.
Whales generally mean those wallets that have at least 1,000 BTC (more than $15 million), while sharks mean those that have many but less (500 to 1,000 BTC).
For smaller cryptocurrencies, these numbers are reduced, if only by virtue of the difference in market capitalizations. Bitcoin in fact capitalizes more than $320 billion, while ADA less than $9 billion, or 36 times less.
So proportionally Cardano whales can be considered those wallets that have at least $400,000 in ADA.
In this case, Cardano “sharks” refers to public addresses on which 10,000 to 100,000 ADA are held.
Cardano (ADA) accumulation phase
Yesterday, Santiment revealed on Twitter that since the collapse of FTX, Cardano’s sharks have added as much as $83 million in ADA to their public addresses.
🦈 Key #Cardano sharks have been accumulating steadily since June. And they have taken this level of dip buying to a new level since the #FTX fallout in early November. Addresses holding 10k to 100k $ADA have added $83M worth of coins since November 7th. https://t.co/ispmPHym3G pic.twitter.com/zPRbi6ZON1
— Santiment (@santimentfeed) December 22, 2022
It is worth mentioning, however, that as was also the case with BTC and ETH, much of this accumulation probably comes from funds withdrawn from centralized exchanges and deposited on non-custodial wallets.
This is because the bankruptcy of FTX, i.e., one of the world’s largest centralized crypto exchanges, has put a scare into many holders of cryptocurrencies held on the exchanges’ custodial wallets, and thus many have withdrawn their funds by moving them to proprietary wallets.
However, the curve shown in Santiment’s graph seems to suggest that there may be more to come.
Indeed, one can clearly discern a continuous surge, not limited to the days following the FTX collapse. It is worth adding that after FTX, doubts about the resilience of Crypto.com, in late November, and Binance, in early December, also began to circulate, but without any real problems with withdrawals.
So although the fear of the tightness of the centralized exchanges lasted for a few weeks, the fact that the steepening of the curve does not hint at abating suggests that there may also be other causes behind this buildup.
The price of ADA
Over the course of 2022, the price of ADA has fallen a great deal. In fact, while it was around $1.3 in January, it has now plummeted to $0.26, which corresponds to a -91.6% from the highs of September 2021.
In other words, 2022 has been a very bad year for ADA, even though the current price is still well above that of November 2020, that is, before the start of the last big bull run.
It is possible that the incredible +2,000% made from January to September 2021 was really a huge speculative bubble that, as it burst, it then slowly brought the situation back toward where it started. At this point, one might also expect a further descent to $0.15.
Cardano’s sharks, however, seem to think otherwise.
The November accumulation began when the price was around $0.37, but in the following weeks, it fell to new annual lows yesterday below $0.25.
It seems to be possible to infer from the sharks’ behavior that they consider the current prices to be particularly cheap, and that they expect a rebound.
The Cardano ecosystem
The problem is that although the technical evolution of the Cardano project is continuing, adoption seems to be stalled.
The TVL of the DeFi protocols on Cardano, standing still at $53 million, conveys the idea well. It is sufficient to mention that it does worse in this respect than even EOS, Algorand and Bitcoin, ranking only 30th behind Gnosis, Aurora, Canto and Heco.
Moreover, compared to the TVL peak in March, when it exceeded 320 million, the current level is 84% lower. So over the course of 2022, Cardano’s use in DeFi also contracted a lot.
To be fair, the Cardano project is not targeting DeFi very much, but when compared with Avalanche’s TVL of $780 million, for example, it gives a good idea of how little this blockchain is being used in what is currently the largest area of use of smaller blockchains.
Even beyond the blockchain, Cardano’s current performance is far from promising.
For example, in recent times very rarely are there more than 100,000 transactions per day, while on the Ethereum blockchain, for example, there are almost constantly over a billion. In other words, Cardano’s blockchain right now is used ten thousand times less than Ethereum’s.
So there do not seem to be any metrics currently suggesting a possible short-term increase in ADA usage, and thus its market value, but it is possible that the sharks are thinking long term.
The sharks
Santiment points out that it has been since June that the accumulation of sharks has actually begun.
In fact, although from June to August this increase was slow and limited, it was still noticeable. The real boom, however, came after the collapse of FTX.
It is worth noting that the maximum peak of ADA stored on addresses that have between 10,000 and 100,000 was in February 2021, that is, at the height of the bull run. Over the course of 2021, they got rid of several tokens, probably taking advantage of the high price to cash them in, until the annual peak in June.
Indeed, from June to August the price of ADA had not fallen since, bouncing from $0.4 to nearly $0.6. However thereafter it fell to almost $0.3 in October and then collapsed in November.
So Cardano’s shark accumulation phase from June to August did not pay off, as the price subsequently fell further.
The matter may be different now in the event that further collapses do not occur.
