Cardano saw a strong 26% rise following the Federal Reserve’s announcement of interest rate cuts two weeks ago, increasing optimism across the crypto market.
Analysts and investors question the sustainability of the recent increase. Despite the initial rally, Cardano price failed to close above a key resistance level, signaling potential weakness in the uptrend.
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Santiment’s on-chain data reveals a decline in demand for ADA, increasing investor caution. Declining network activity and buying pressure raise doubts about the sustainability of the current recovery.
While the market awaits further developments, investors are watching for signs of a reversal or continuation of the upward trend, understanding that ADAs The next step could set the tone for his performance in the coming weeks.
Cardano indicator shows worrying data
Cardano faces significant risk of a 30% drop to its annual low of around $0.27 as data on the Santiment network reveals increased sales pressure and decreased demand.
The warning signs for ADA price have become clearer, with its daily active address divergence (DAA) showing a negative reading of -43.3% at the time of writing. 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, indicating a worrying trend for Cardano.
DAA’s negative divergence suggests that much of ADA’s rally this month following the Federal Reserve’s interest rate cuts has been fueled more by broader market sentiment than any specific demand for ADA itself. This lack of organic demand increases the likelihood of a sharp correction soon.
Without sustained buying pressure, Cardano’s price could fall sharply as traders begin to take profits, pushing prices down further.
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If ADA fails to break through its current resistance level of around $0.41, analysts expect a deeper correction, potentially pushing the price back towards the yearly low of $0.27. With weakening demand and increasing selling pressure, Cardano’s near-term outlook appears uncertain and traders are bracing for further downside risks.
ADA Price Action: Testing a Crucial Supply Level
ADA trades at $0.38 after a 10% drop from its 200 daily exponential moving average (EMA) of $0.41. This level became a crucial resistance area as the price formed a new local high around this zone.
ADA must reclaim the $0.41 level and surpass the next key resistance at $0.45 to confirm an uptrend for the coming weeks. Successfully breaking through these levels would signal renewed strength, giving bulls control and potentially leading to higher prices.
However, if ADA fails to overcome these critical levels, the altcoin could face even more downward pressure. A failure to recover $0.41 and surpass $0.45 would likely result in an increase in sales, triggering a potential 30% drop. In such a scenario, ADA would be at risk of revisiting its annual low of around $0.27.
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Given the current market uncertainty and decreasing demand, traders are closely watching ADA’s price movements as the next few days could be crucial in determining whether a bullish breakout or a deeper correction is on the horizon.
Featured image of Dall-E, TradingView chart
