Cardano (ADA) Price Prediction: Is a 30% Drop Imminent?
Cardano (ADA) Faces Potential 30% Drop: On-Chain Data Reveals Weakening Demand
Cardano (ADA) experienced a significant surge of 26% following the Federal Reserve’s recent interest rate cuts announcement, mirroring a broader wave of optimism across the crypto market. However, analysts and investors are questioning the sustainability of this recent rally, especially considering ADA’s failure to break above a key resistance level.
On-chain data from Santiment paints a concerning picture, revealing a decline in demand for ADA. Decreased network activity and buying pressure raise serious doubts about the longevity of the current uptrend. This suggests that ADA’s recent rally might be fueled more by broader market sentiment than genuine demand for the cryptocurrency itself.
Cardano’s Troubling On-Chain Signals
A crucial indicator, the daily active-address (DAA) divergence, currently shows a negative reading of -43.3%, indicating a worrying trend for Cardano. This metric, which tracks the correlation between an asset’s price movements and changes in its daily active addresses, has remained negative since September 7.
This negative DAA divergence points to the lack of organic demand for ADA. Without sustained buying pressure, Cardano’s price could experience a sharp correction as traders lock in profits, further driving prices downward.
Is a 30% Drop on the Horizon for ADA?
Analysts believe that if ADA fails to break above its current resistance level of around $0.41, a deeper correction is likely, potentially pushing the price back to its yearly low of $0.27, representing a 30% drop.
ADA currently trades at $0.38, following a 10% dip from its daily 200 exponential moving average (EMA) at $0.41. This level has become a crucial resistance area, as the price formed a new local high around this zone.
Reclaiming the $0.41 level and pushing above the next key resistance at $0.45 would be crucial for confirming a bullish trend for the coming weeks. However, failing to overcome these critical levels could trigger increased selling and lead to a potential 30% drop, pushing ADA back towards its yearly low of $0.27.
What’s Next for ADA?
The near-term outlook for Cardano appears uncertain, with traders bracing for further downside risk. Given the current market uncertainty and declining demand, the next few days will be pivotal in determining whether a bullish breakout or a deeper correction is on the horizon.
Investors are closely watching ADA’s price movements and on-chain metrics for any signs of a reversal or continuation of the uptrend. ADA’s next move could set the tone for its performance in the weeks ahead.