Cardano tells a different story despite ADA’s northward movement

Journalist

Posted: November 17, 2023

• AMB surpassed the psychological level of $0.40, but active addresses did not grow.
• Technical indicators point to further upside for ADA.

The past few days Solana [SOL] is the best performing cryptocurrency out of the top 10 by market capitalization. But over the past 24 hours, SOL has passed that baton Cardano [ADA].

AMBCrypto took a critical look at the ADA price action and noted that the token value increased by 11.24 within the aforementioned time frame. In doing so, ADA broke the psychological level of $0.40.

Although this walk was an impressive spectacle, the same could not be said of the Cardano network. One reason for this was the difference in Price-Daily Active Addresses (DAA).

The declining activity is not bad news now

According to AMBCrypto’s analysis of Santiment’s data, active addresses on the Cardano network decreased as the price increased.

For context, the DAA is one of the best on-chain metrics for evaluating the overall user activity on a blockchain.

The statistic also has a significant impact on the value of a cryptocurrency. At the time of writing, ADA’s price DAA was -43.16%.

Using the price DAA divergence strategy, price growth across the active addresses could serve as a buying signal for short- to medium-term investors.

Source: Santiment

If the Cardano DAA had surpassed the price, this would have been a sell signal. Typically, ADA’s upward trend within such a short period could leave market players wondering if this was a good entry point.

But based on the benchmark mentioned above, buying ADA at $0.40 might not be a bad idea.

On the ADA/USD 4-hour chart, the 9-day EMA (blue) had crossed the 20 EMA (yellow). This reversal indicates that the token was still trending optimistic. So the ADA price may continue to rise.

The accumulation/distribution line (A/D) also supported the uptrend.

This was because the A/D rose sharply, indicating that there has been more accumulation than distribution of ADA. In terms of entry/exit, one indicator to take into account is the Know Sure Thing (KST).

A buy signal occurs when KST crosses above the zero line, indicating a positive shift in momentum. Conversely, when the indicator drops below the zero line, traders should consider this as a sell signal.

Source: TradingView

Traders are ready to pull the trigger

At the time of writing, KST was close to crossing the zero line. So, traders should carefully observe the trend at this point.

If the KST finally jumps above zero, in addition to the aforementioned DAA divergence, the ADA may be primed for another surge.

Moreover, it seemed that traders were already taking the remedy from the on-chain data and technical perspective. This was indicated by the financing rate.

Read Cardanos [ADA] Price prediction 2024-2025

A positive funding rate implies that traders are optimistic about a cryptocurrency.

On the other hand, a negative financing rate indicates bearish sentiment. At the time of writing, ADA’s funding rate stood at 0.01%, confirming the bullish bias traders have.

Source: Santiment