Cardano (ADA) has faced a sharp 11% decline in recent weeks, leaving a substantial portion of its supply underwater. Yet, optimism remains among traders and investors, with hopes that the cryptocurrency will recover lost ground and regain profitability.
Cardano’s Profitability Challenge
The recent price drop has affected approximately 3.31 billion ADA tokens, acquired when the asset was trading between $0.35 and $0.37. This supply, valued at over $1.1 billion, is now below the waterline. However, according to the Global In/Out of the Money (GIOM) metric, a recovery above the $0.37 mark would bring these holdings back into profit.
This recovery presents a key opportunity for both short-term traders and long-term investors. If ADA crosses the $0.37 resistance, it would not only restore the profitability of these tokens but could also trigger renewed confidence, potentially leading to further upward price momentum.
Despite Cardano’s recent downturn, investor sentiment appears to be holding steady. The realized profit/loss indicator, which tracks panic selling, has not shown significant spikes, indicating that ADA holders are choosing to “HODL” rather than selling at a loss.
This steady investor behavior is crucial for the long-term stability of Cardano. By avoiding panic selling, ADA holders are demonstrating confidence in the project’s potential, which could be a key driver in any upcoming recovery.
Can ADA Regain Momentum?
At the time of writing, Cardano is trading at $0.35, hovering above the key support level of $0.34. This support level is critical for ADA’s price trajectory. If the cryptocurrency manages to defend this level, it could stage a recovery toward the $0.37 resistance.
Breaking through the $0.37 resistance would not only return the 3.31 billion ADA tokens to profitability but also strengthen investor sentiment, potentially leading to a sustained price rally. In such a scenario, selling pressure could reduce as investors gain confidence in ADA’s upward potential.
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However, if Cardano fails to break through this key resistance, the price may remain consolidated below $0.37. A drop below the $0.34 support level could invalidate the bullish outlook, opening the door for further losses and dampening short-term enthusiasm.
Is a Cardano Comeback on the Horizon?
While Cardano has faced a sharp decline, its ability to hold key support levels and investor confidence could determine its recovery path. A successful break above $0.37 would not only restore profitability for underwater holders but could also reignite bullish momentum. However, failure to defend key levels could lead to further price declines. For now, ADA holders and traders are keeping a close eye on the market, with hopes that Cardano’s long-term potential will prevail.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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