Cardano Price Forecast: Potential 21% Correction Ahead

The price of Cardano (ADA) has been on a downward trend recently. Currently priced at $0.34, this well-known altcoin has experienced a 3% decline since Monday.

Analysis of on-chain data indicates that Cardano may undergo a price correction of as much as 21% in the near future. This article explores the reasons behind such a potential decline and outlines the key price levels that ADA investors should monitor.

Risks Associated with Cardano’s High NVT Ratio

At this moment, Cardano’s Network Value to Transactions (NVT) ratio, a metric used to measure its valuation, has reached its highest point since February 2023, clocking in at 12.13 according to Santiment’s data.

A significant increase in an asset’s NVT ratio suggests it may be overvalued. This means that the asset’s price is relatively high compared to the level of activity on its network. History shows that a soaring NVT ratio is often a precursor to a price correction, as it typically indicates that a price surge is not supported by actual demand.

Learn more: How To Purchase Cardano (ADA) and Essential Information

The interplay between ADA’s declining price and an increasing NVT ratio indicates a negative sentiment in the market. Many holders are selling off their assets, which leads to a decrease in transaction volumes and further drives down the price.

Moreover, Cardano’s waning Relative Strength Index (RSI) reinforces this pessimistic perspective. At the moment, this indicator is in a downward trajectory and sits just below the neutral line at 48.57.

This RSI figure points to a diminishing buying pressure in the Cardano market, with sellers gaining the upper hand. Traders might see this as a signal that prices could keep falling, prompting further sales and worsening the price drop.

ADA Price Forecast: Is a 21% Drop Likely in the Coming Days?

Currently, Cardano is trading at $0.3469 and is testing a crucial support level at $0.3479. A surge in selling pressure may lead to a breach of this support level, possibly resulting in a decline of Cardano’s price by 21% down to its low of $0.27 observed on August 5.

Learn more: Who Is Charles Hoskinson, the Founder of Cardano?

Conversely, if buying activity increases and ADA bulls manage to hold this support level, the coin could initiate an upward trend towards $0.47, which is a price it last reached in June.