Cardano has experienced a remarkable 26% increase since the Federal Reserve announced interest rate cuts two weeks ago, which has heightened overall excitement in the cryptocurrency market.
Experts and investors are now questioning whether this recent increase can be maintained. Despite the initial upswing, Cardano’s price has not managed to close above an important resistance level, indicating possible fragility in its upward trend.
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Data from Santiment’s analytics indicates a fall in ADA’s demand, which adds to the wariness among investors. A decline in network activity and buying pressure raises concerns about the longevity of this recent rally.
As the market continues to monitor events closely, traders are on the lookout for signs that could indicate either a reversal or a continuation of the uptrend, aware that ADA’s next actions may significantly influence its trajectory in the coming weeks.
Concerning Data Indicated by Cardano Metrics
Cardano is at a notable risk of experiencing a 30% decline, potentially reaching its yearly low close to $0.27, as on-chain data from Santiment shows increasing selling pressure and falling demand.
The indicators for ADA’s price are becoming more pronounced, with its daily active-address (DAA) divergence showing a concerning -43.3% at the time of writing. This metric gauges the connection between an asset’s price shifts and its daily active addresses and has remained negative since September 7, signaling a concerning trend for Cardano.
This negative DAA divergence indicates that much of ADA’s recent gains this month, following the Federal Reserve’s interest rate cuts, have been driven more by general market sentiment rather than any specific demand for ADA itself. This lack of inherent demand heightens the chances of an imminent correction.
In the absence of sustained buying momentum, Cardano’s price could take a significant hit as traders look to secure profits, which would further drive prices downward.
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If ADA cannot breach its current resistance level around $0.41, analysts predict a more profound correction that could see the price drop back to its yearly low of $0.27. With weakening demand and mounting selling pressure, Cardano’s short-term outlook appears bleak, leading traders to prepare for potential further declines.
ADA Price Dynamics: Approaching a Key Supply Zone
ADA is trading at $0.38, experiencing a 10% decrease from its daily 200 exponential moving average (EMA) positioned at $0.41. This area has become a vital resistance zone since the price has reached a new local high in this range.
For a bullish trend to be confirmed in the upcoming weeks, ADA needs to re-establish itself above the $0.41 mark and surpass the next significant resistance level at $0.45. Successfully moving past these thresholds would indicate renewed strength, potentially allowing bulls to regain control and drive prices higher.
Should ADA fail to break above these essential levels, the altcoin may face increased downward pressure. A breakdown below $0.41 and a failure to surpass $0.45 could likely trigger heightened selling activity, leading to a potential 30% decline. In this case, ADA would again be at risk of revisiting its yearly low near $0.27.
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In light of the current market volatility and declining demand, traders are closely observing ADA’s price fluctuations, as the upcoming days could prove crucial in determining whether a bullish breakout is on the horizon or if a further downturn is imminent.
Featured image from Dall-E, chart from TradingView
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