ADA is undervalued according to insights data. Should you buy it?

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ADA is undervalued according to insights data. Should you buy it?

By Motiur Rahman - min read

Cardano (ADA/USD) is significantly undervalued. That’s according to data by crypto analytics Santiment. ADA trades at a low of $0.36 after a bearish market the past one week.

Using Cardano’s MVRV Z-Score, Santiment data highlights ADA’s low valuation. Accordingly, the token trades at its lowest level to its realised value. Since the beginning of 2019. A low Z-score signifies an undervalued asset. Is the undervaluation a sign of a market rebound for ADA?

Santiment suggests that ADA doubled in value in just 3 months, the last time its MVRV Z-Score reached low levels. That comes when the analytics firm also reports increasing capitulation across the crypto market. Capitulation is characterised by traders closing their positions at a loss. The situation occurs before the market rebounds.

The latest data occurs even as Cardano remains under pressure. However, the token has recovered some losses, adding an intraday 4.80% on Monday. The gains come barely 24 hours after FTX CEO Sam Bankman-Fried assured members of a spot ADA on the exchange. ADA is the only token in the top 25 on the exchange lacking a spot listing.

AADA is approaching the 23.6% retracement after the latest recoveries

Source – TradingView

From the technical outlook, ADA is initiating a recovery above the $0.32 zone. From the Fibonacci retracement, the cryptocurrency’s swing high lies at $0.5109 and a swing low of $0.3296. The possible retracement levels are $0.37 (23.6%), $0.3988 (38.2%), $0.42 (50%), $0.44 (61.8%).

The key retracement could be at the Fib levels shown above.

Should you buy ADA?

While recovery at $0.32 is a good sign for ADA, we have yet to confirm bullish momentum. The cryptocurrency remains below a crucial support-turned-resistance at $0.42. The level coincides with the 50% or 61.8% retracement. 

Again, the cryptocurrency market outlook remains less convincing. Thus, we might stay in a bear market longer. Most cryptocurrencies are mixed.

Nonetheless, ADA remains attractive for investors seeking a cryptocurrency with underlying fundamental value. Potentially, the return of a bull market would welcome a lasting rally for depressed ADA. 

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