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Is Cardano (ADA) Becoming a Poor Man’s Chain? Retail Holds the Bag as Whales Exit
The recent price surge of Cardano (ADA), which has seen its value increase by 25% over the past week, may be misleading. Upon closer inspection, it appears that this growth is fueled by retail investors rather than institutional or large-scale holders. According to data from IntoTheBlock, larger ADA wallets have been dwindling since 2022, with significant drops in wallets holding between $100,000 and $1 million.
Meanwhile, smaller wallets, typically held by individual investors, are growing rapidly. This disparity raises concerns about Cardano’s long-term viability as a blockchain network. Typically, a healthy blockchain is backed by both institutional investors and active developers.
The data suggests that whales, or large-scale holders of ADA, have been exiting the market. As a result, retail investors have taken up the slack, driving the price up in an effort to capitalize on potential profits. However, this shift in ownership could be detrimental to Cardano’s future growth prospects.
In addition to whale departures, Cardano’s DeFi sector has also seen a significant decline, with total value locked (TVL) decreasing by 56% from $750 million in March to approximately $325 million today. This downturn is attributed to the exodus of large-scale investors and developers.
Furthermore, daily fees have plummeted to zero, indicating an utter lack of usage on the network. Cardano’s NFT market has also experienced a substantial decline, with volume falling by over 90% in just six months.
The absence of institutional investment and decreasing developer activity is a red flag for potential investors. Without whales and developers, it becomes increasingly difficult for Cardano to secure funding, build new applications, or adapt to changing market conditions.
Source: coinchapter.com
