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Cardano saw a strong 26% rally after the Federal Reserve announced interest rate cuts two weeks ago, boosting optimism in the cryptocurrency market.
Analysts and investors wonder how sustainable the recent rise is. Despite the initial rally, Cardano price failed to close above the key resistance level, indicating potential weakness in the uptrend.
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On-chain data from Santiment reveals declining demand for ADA, increasing investor caution. Low 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, knowing that ADA’s next move could set the tone for its performance in the coming weeks.
The Cardano indicator appears in relation to the data
Cardano faces a significant risk of a 30% decline to a yearly low of around $0.27 On-chain data from Santiment It reveals high selling pressure and decreasing demand.
Warning signs for ADA price are becoming more apparent, with the Daily Active Address (DAA) variance showing a negative reading of -43.3% at the time of writing. This metric, which tracks the relationship 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.
The negative variance for DAA suggests that much of the rise in ADA this month, following interest rate cuts by the Fed, was driven more by broader market sentiment than by any specific demand for ADA itself. This lack of organic demand increases the likelihood of a sharp correction soon.
Without sustained buying pressure, the price of Cardano could fall sharply as traders begin to take profits, causing prices to fall even further.
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If ADA fails to break through the current resistance level at around $0.41, analysts expect a deeper correction, which could push the price to a yearly low of $0.27. With weak demand and increasing selling pressure, Cardano’s near-term outlook looks uncertain, and traders are bracing for further downside risks.
ADA Price Action: Testing the Crucial Supply Level
ADA is trading at $0.38, after a 10% decline from the 200 daily exponential moving average (EMA) of $0.41. This level has become a crucial resistance area, as the price has formed a new local high around this area.
ADA must reclaim the $0.41 level and push above the next major resistance level at $0.45 to confirm the uptrend over the coming weeks. Successfully surpassing these levels would signal renewed strength, giving bulls control and potentially sending prices higher.
However, if ADA fails to cross these critical levels, the altcoin could face further downward pressure. Failure to reclaim $0.41 and exceed $0.45 would likely result in increased selling, resulting in a potential 30% decline. In such a scenario, ADA would be at risk of revisiting its yearly low of around $0.27.
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Given the current market uncertainty and low demand, traders are carefully monitoring ADA price movements, as the next few days could be pivotal to determine if an upward breakout or deeper correction is on the horizon.
Featured image by Dall-E, chart from TradingView
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