- Cardano price has shed 34% in the last two months with no signs of recovery.
- While development activity and transaction volume are on an uptrend, other key on-chain metrics remain lull.
- ADA needs to produce a higher high on a large-enough timeframe and sustain to suggest a shift in trend.
Cardano (ADA) price has been on a downtrend since September 2021, with no meaningful attempts to break higher. This persistent southbound move is accompanied by a steady rise in transaction volume and a steep rise in development activity.
Also read: Cardano price could move soon after 30% fall
Cardano price needs to get out of consolidation
Cardano price is currently trading at $0.2477, attempting to form a bottom above the key support level at $0.2500. This barrier has supported downward trending ADA not once but twice in the last eight months, with the current retest being the third.
A swift bounce here could result in ADA producing another lower high, as has been happening since June 2022.
ADA bulls can get excited if Cardano price breaches the declining trend line connecting the aforementioned lower highs. A successful flip of this hurdle into a support floor would put the smart contract token in front of another key resistance level of $0.4019.
A retest of the aforementioned level would constitute a 63% gain for ADA.
ADA/USDT 3-day chart
On-chain metrics for ADA remain lull
With the exception of transaction volume and development activity, other on-chain metrics show no signs of improvement, which only adds to ADA’s bearish outlook. The consistent uptrend of transaction volume seen over the last six months indicates massive on-chain activity. Currently, this metric stands at 1.72 billion ADA, denoting 129.33% growth from roughly 750 million ADA in March 2023.
ADA transaction volume
Furthermore, the development activity for ADA has seen massive growth between July 20 and September 12. Typically, a spike in development activity is seen before major releases or network upgrades. Investors usually correlate the uptick to a bullish sign. But considering the current market condition, the increase in development activity is unlikely to push ADA price higher.
ADA development activity
Why the slump in Cardano price?
As seen in IntoTheBlock’s Historical In/Out of the Money chart, nearly 4% of the investors are “In the Money,” while 0.32% are “At the Money.” Nearly 95.69% of investors are “Out of the Money.”
ADA Historical In/Out of the Money
To further visualize the “Out of the Money” holders, investors can take a look at IntoTheBlock’s Global In/Out of the Money (GIOM). This indicator shows three major clusters of underwater investors at $0.2640, $0.3182 and $0.3942.
At these respective key hurdles, 4.40 billion, 5.52 billion and 8.82 billion ADAs purchased by 263,000, 482,000 and 481,000 addresses are being held at a loss relative to the current price of Cardano.
So, any attempts to overcome the $0.2640, $0.3182 and $0.3942 resistances will likely be met with significant spikes in selling pressure from these investors trying to breakeven. Hence, investors opening long positions for ADA from the current level should consider these levels as key take-profit levels.
ADA GIOM
Hence, the reason why ADA is not rallying higher is due to the sell-side pressure present in the ecosystem from underwater holders. But, considering the current position of Cardano price, a short-term rally could be possible if the $0.2500 support level holds and bulls make a comeback.
On the other hand, if Cardano price flips the aforementioned level into a resistance barrier on the three-day timeframe, it would create a lower low and invalidate the recovery rally thesis. In such a case, the GIOM shows the next key support is at $0.0995, where nearly 160,000 addresses purchased 1.55 billion ADA.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Ripple whales prevent XRP decline after soaking $4 billion in sell pressure from realized profits
Ripple's XRP is down 5% on Tuesday after news of South Korea declaring martial law sparked a surge in selling activity and significant profit-taking among investors. However, whales have stepped up buying pressure as the token looks to stage a recovery.
Paul Atkins shows reluctance to replace SEC Chair Gary Gensler
Donald Trump's transition team is yet to find a candidate to replace Gary Gensler as SEC Chair in January. Paul Atkins, the favorite to replace Gensler, has reportedly shown reluctance toward the position. Other top choices for SEC Chair include Teresa Goody Guillén, Brian Brooks and Robert Stebbins.
Crypto Today: BTC holds $95K, Cardano sets $700M record, Tron and Avalanche advance.
Bitcoin price consolidated around the $95,000 mark on Tuesday, as traders continue to rotate profits towards the altcoin markets. Positive sentiment surrounding potential altcoin ETF approvals in 2025 has sparked a major accumulation wave across the altcoin markets.
Dogecoin Price Forecast: Traders move $380M as DOGE mirrors Bitcoin’s pullback
Dogecoin price continues to consolidate below the $0.40 level on Tuesday, down 16% within the daily timeframe. After multiple failed attempts at breaching $0.50 over the past week, speculative traders have moved to scale down their DOGE positions.
Bitcoin: A healthy correction
Bitcoin (BTC) experienced a 7% correction earlier in the week, dropping to $90,791 on Tuesday before recovering to $97,000 by Friday. On-chain data suggests a modest rebound in institutional demand, with holders buying the dip. A recent report indicates BTC remains undervalued, projecting a potential rally toward $146K.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.