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Cardano has seen a surge of 26% following the Federal Reserve’s interest rate cut announcement two weeks ago, boosting optimism in the crypto market.
Analysts and investors are questioning the sustainability of the recent rise. Despite the initial rally, Cardano’s price failed to close above a key resistance level, signaling potential weakness in the uptrend.
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On-chain data from Santiment shows a decline in ADA demand, increasing investor caution. Reduced network activity and buying pressure raise doubts about the sustainability of the current rally.
As the market awaits further developments, investors are closely watching for signs of a reversal or continuation of the uptrend, recognizing that ADA’s next move could set the tone for its performance in the coming weeks.
Cardano indicator provides information about data
Cardano is at significant risk of a 30% decline to a yearly low of around $0.27 on-chain data from Santiment reveals rising selling pressure and declining demand.
The warning signs for ADA’s price have become clearer: the daily divergence of the active address (DAA) showed a negative value of -43.3% at the time of writing. This metric, which tracks the correlation between an asset’s price movements and changes in daily active addresses, has remained negative since September 7, indicating a troubling trend for Cardano.
The negative DAA divergence suggests that much of ADA’s rally this month following the Federal Reserve’s rate cuts was fueled more by broader market sentiment than any specific demand for ADA itself. This lack of biological demand increases the likelihood of a sharp correction in the short term.
Without continued buying pressure, Cardano’s price could fall sharply as traders begin locking in their profits, pushing prices down further.
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If ADA fails to break above the current resistance level of around $0.41, analysts expect a deeper correction, potentially pushing the price back to the yearly low of $0.27. Weaker demand and increasing selling pressure make Cardano’s near-term outlook look uncertain and traders are preparing for further downside risk.
ADA Price Action: Testing a Critical Supply Level
ADA is trading at $0.38, following a 10% decline from the daily 200 exponential moving average (EMA) of $0.41. This level has become a crucial resistance area as price formed a new local high around this zone.
ADA needs to regain the USD 0.41 level and move above the next key resistance at USD 0.45 to confirm a bullish trend for the coming weeks. Successfully breaking through these levels would be a sign of renewed strength, putting the bulls in control and potentially leading to higher prices.
However, if ADA fails to rise above these critical levels, the altcoin could face further downside pressure. Failure to recover $0.41 and surpass $0.45 would likely result in an increase in sales, resulting in a potential decline of 30%. In such a scenario, ADA would be at risk of revising its annual low of around $0.27.
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Given the current market uncertainty and weakening demand, traders are keeping a close eye on ADA’s price movements as the coming days could be crucial in determining whether a bullish breakout or a deeper correction is on the horizon.
Featured image of Dall-E, chart from TradingView
