- As seen by on-chain data, numerous ADA wallets have had their holdings more than double in less than two weeks, demonstrating that Cardano's native token is a hot item at the moment.
- According to IntoTheBlock's data, addresses that have held bitcoin for less than a month have lowered their supply as bitcoin declined by $10,000 in less than a week, lowering the amount of bitcoin in circulation.
Reduced costs result in a rise in demand for ADA
Despite recent price declines in the cryptocurrency market, institutional investors have continued to add to their holdings of different assets.
At one point, according to most estimates, the cryptocurrency ecosystem saw a major correction that destroyed more than $500 billion from its entire market valuation in a single week. Cardano, whose price hit a six-week high of $1.65 on January 18th, was one of the cryptocurrency market's most significantly harmed assets.
ADA plummeted 45 percent in four days on January 22nd, from the previously recorded local high of $0.92 to $0.92. The token, however, has regained some of its lost ground and is again trading at or over $1, despite the fact that it is still down roughly 25% year to date.
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Despite this, the slump has not lessened investors' enthusiasm for the asset. According to Santiment data, the opposite is true. According to the analytics site, addresses owning between 10,000 and 1,000,000 ADA tokens increased their holdings by almost $55 million in less than two weeks.
`In percentage terms, this means their holdings have grown by more than 110 percent in only 11 trading days!’
It's worth noting that the IntoTheBlock data revealed a similar pattern for BTC, which is intriguing. As previously reported, after a price crash that saw bitcoin fall by $10,000 in a matter of days, whales and long-term investors have continued to acquire bitcoin.
Although there seems to be much demand in the native token, the network that supports it has lately encountered some challenges.
Following the launch of Cardano's first decentralized application (dApp) — SundaeSwap — last week, claims started to circulate that many transactions had failed due to blockchain congestion.
Congestion on the blockchain only became worse in the following days as more and more applications started to use it. Indeed, the blockchain load on Cardano began to climb in the middle of January and peaked at 94.1 percent on the 21st. The proportion has been over 90% for the previous two weeks.
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Cardano increased the block size by 12.5% two months ago, yet it does not seem to be having the expected effect. As a result, the team expects to add a layer 2 scaling solution in the next Hydra release later this year.
According to research, young Bitcoin addresses sold 36% of their holdings at a loss
Bitcoin's USD value has experienced one of the most dramatic corrections in its history during the previous few weeks. Prior to plunging almost $10,000 to a six-month low below $33,000 on January 20th, the asset had traded over $43,500 the previous day.
Historically, long-term Bitcoin investors have tended to hold onto their holdings throughout periods of market turbulence. The fact that some whales and even the country that legalized the commodity first – El Salvador – are investing in the decline demonstrates the phenomenon.
On the other hand, Bitcoin's increasing volatility and rapid price corrections have a noticeable influence on those who entered the market more recently and are not yet used to it.
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When the value of Bitcoin falls by double-digit percentages in a short period of time, as it has done several times in the past, such investors liquidate a substantial portion of their holdings.
A similar scenario happened during the last downturn, according to data from blockchain analytics firm IntoTheBlock. The Balance by Time Kept Indicator of the resource revealed that bitcoin investors who held their bitcoins for less than a month reduced the total bitcoin supply by 36% on a monthly basis.
"These traders were monitoring bitcoin's market activity, and when the price started to decrease, they sold at a loss," IntoTheBlock reports.
