Cardano (ADA) 18% Decline Raises Alarm Amid Weak Network Activity

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As a seasoned crypto investor with a knack for reading between the lines of market trends and on-chain indicators, I must admit that the current state of Cardano (ADA) has raised some eyebrows among the community. After a promising run that saw ADA reach a yearly high of $1.22 on December 8th, the subsequent drop to $0.88 today is concerning, especially when considering the IOMAP and network activity data.

The value of Cardano (ADA) has dropped approximately 18% over the past week, mirroring wider market trends following a stretch of continuous growth. However, it’s not just the price that’s been affected – the activity within the Cardano network has also seen a decline.

The general downturn affecting the project has sparked worries about the altcoin’s near-future success. Based on this chain analysis, these fears could be justified.

Cardano Encounters Major Roadblock

As an analyst, I observed that on December 8, Cardano’s price peaked at a yearly high of $1.22. However, today, its value has dipped to $0.88, a result of significant sell-offs. Despite ADA holders potentially expecting a quick recovery, the In/Out of Money Around Price (IOMAP) indicates that such an uptrend might not be straightforward.

The IOMAP (Input-Output Map) is a tool that identifies areas of on-chain support and resistance. It achieves this by examining the number of addresses currently holding assets with unrealized profits versus those with losses. Generally, the larger the amount of transactions at a specific price range, the more robust the support or resistance becomes.

Based on data from IntoTheBlock, the price level of approximately $0.92 for ADA may serve as a significant barrier due to the accumulation of nearly 951.02 million tokens by about 58,470 Cardano addresses in this range. This token concentration is greater than the amount considered “in-the-money” between $0.74 and $0.88.

If purchasing activity continues to be weak, ADA’s price may struggle to surpass its current level, potentially leading to a prolonged period of decline or correction.

According to Santiment’s data, there seems to be a strong feeling that Cardano’s network activity has decreased significantly. Specifically, on December 16, the number of daily active addresses surpassed 51,000, but at present, it has dropped to approximately 32,700.

An active address is defined as a wallet involved in a successful transaction—either as a sender or receiver—over a given period. This metric serves as a strong indicator of daily user activity on the blockchain. 

An increase in active addresses often indicates higher user involvement, generally predicting positive price movements. Conversely, the current decrease in this statistic might be pointing towards pessimism among ADA users, potentially indicating a bearish trend.

ADA Price Prediction: Extended Correction Unavoidable

Looking at the technical side, the Exponential Moving Average (EMA) indicates that the price of Cardano might keep dropping. Essentially, the EMA tracks the trend surrounding a particular cryptocurrency.

On the daily graph, the price of Cardano (ADA) has fallen beneath the 20 Exponential Moving Average (represented by blue). Dropping below this moving average indicates a potentially bearish trend. Furthermore, the token’s value currently aligns with the position of the 50 EMA (yellow), suggesting a potential stalemate or possible consolidation.

This current level suggests that if Cardano can’t hold onto its support at approximately $0.88, there could be a potential drop in price down to around $0.77. If market conditions become extremely bearish, the value of ADA could even decrease to roughly $0.55.

But should the level of activity on the Cardano network increase significantly, it’s possible that this trend could reverse. Under such circumstances, the value of the cryptocurrency could potentially surge to around $1.33.

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2024-12-23 13:00