Cardano (ADA) Faces Downward Trend Amid Crypto Slump: Challenging Recovery Ahead
Summary:
The native token of Cardano (ADA) experienced significant losses amid the cryptocurrency market downturn on April 10. Data suggests that poor on-chain metrics are responsible for the decline, with dips in daily transaction volume and core developer activity. Technical indications also reveal a weak market structure, with ADA undergoing a downward trend since its two-year high in mid-March. With a challenging recovery ahead, ADA will need to convert key resistance into support to prevent further losses.
During the widespread cryptocurrency slump on April 10, Cardano's native (ADA) token endured significant losses, as documented by Cointelegraph Markets Pro and TradingView. The ADA token value bottomed at $0.558 on April 10, a 3% decrease over the day before, as seen in the ADA/USD daily pricing chart. But what is triggering this retracement in ADA's value? The culprit appears to be lackluster performances in on-chain figures.
Token Terminal data concurs that the diminished ADA price mirrors a slight reduction in the token's trading volume and core developer engagement. The count of unique daily GitHub contributors, who have each committed more than once to the public blockchain repository, has decreased from a three-month peak of 146 developers on March 6, to 122 on April 10, a decrease of 16.5%.
Over the same period, the daily transaction volume saw a dramatic reduction of 80.7%, going from around $2.189 billion to $421 million. Additional information from DefiLlama suggests that the total value secured on the Cardano network fell from $473.33 million on March 16 to $371.51 million on April 10.
Waning trading volume, core developer activity, and TVL have coincided with ADA’s 27% price decline during the same period, signaling their influential role in shaping ADA's short-term price movement, which was also seen on April 10.
Technical outlooks for ADA reveal a weak market structure. The current price correction for ADA looks to be part of a downturn that initiated in mid-March, following the token's two-year climb to $0.81. Profit-taking occurred as the daily chart's relative strength index (RSI) surged past 70, indicating ADA as being overpriced and subject to a potential trend reversal or correction.
This extended bearish trend for ADA is reinforced by continued descent within a falling parallel channel. With an RSI of 48, market conditions appear to be biased toward further decline.
Looking forward, ADA faces a challenging path to recovery. Recent price setbacks have signaled further potential weakness due to the upper boundary of the descending channel's resistance at $0.61—a formidable obstacle at this level. The likelihood of prolonged downturn intensifies if the ADA buyers are unable to secure this level as a line of support.
This bearish projection is corroborated with on-chain information from IntoTheBlock. Its In/Out of the Money Around Price (IOMAP) model depicts the channel's upper $0.61 barrier just over the $0.58 to $0.60 price band, where approximately 2.17 billion ADA had previously been purchased by about 132,970 accounts.
This sturdy barrier could potentially counteract any buying pressure that could push ADA's price upward. For ADA to prevent further losses, buyers must convert this zone into a support line. It's important to note that this article does not provide investment guidance or recommendations. Every investment and trading move carries a risk, thus, readers are urged to perform their due diligence before making decisions.
Published At
5/22/2024 7:34:20 PM
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