Cardano (ADA), one of the top altcoins by market cap, has struggled to find bullish momentum in recent weeks. Investors hoping for a quick rebound may be disappointed, as multiple indicators suggest that ADA could continue facing downward pressure.
MVRV Long/Short Difference Points To Bearish Sentiment
One key indicator supporting this outlook is the Market Value to Realized Value (MVRV) Long/Short Difference. This metric, often used to gauge investor sentiment, highlights the balance between long-term and short-term holders’ profits. When long-term holders have more unrealized profits than short-term holders, it’s typically a bullish sign. However, when short-term holders dominate, the sentiment tends to shift bearish.
Currently, Cardano’s MVRV Long/Short Difference stands at -25.67%, signaling that short-term holders have more gains. According to Santiment, this negative figure indicates that Cardano has yet to shake off its bearish phase. The lack of sustained demand for ADA points to the possibility of further price declines.
Price-Daily Active Addresses (DAA) Divergence Sends Sell Signal
Another bearish signal comes from the Price-Daily Active Addresses (DAA) Divergence metric. This indicator shows whether price movements are backed by network activity. When the DAA divergence is positive, it indicates healthy user participation, supporting price increases. Conversely, a negative DAA divergence suggests a lack of activity, signaling a potential sell-off.
In Cardano’s case, the DAA divergence remains negative, pointing to a lack of user activity. This dearth of engagement in the Cardano network suggests that ADA’s current price movements may not be sustainable, reinforcing the outlook for further declines.
A closer look at ADA’s daily chart shows that the cryptocurrency broke out of a descending triangle on September 22, briefly pushing its price up to $0.42. However, the token has since lost momentum, and the downward trend has resumed.
ADA is now at risk of slipping below the critical support level of $0.35. If that happens, Cardano’s price could fall further, potentially reaching as low as $0.31. This level is significant, as it would represent a major test for ADA’s market resilience.
That said, if bulls manage to defend the $0.35 support level, ADA may bounce back. Increased buying pressure could push Cardano’s price back up to $0.40, with the possibility of reaching $0.46 or even $0.50 in the event of a stronger rally. However, such a recovery remains uncertain in the face of current bearish signals.
Also Read: Cardano To Unlock 37.06M Tokens – Will $0.3846 ADA Surge By 2025?
Given the negative sentiment across multiple indicators, including the MVRV Long/Short Difference and the DAA divergence, it appears that Cardano is not yet ready for a bullish breakout. Investors should proceed with caution, as ADA may continue to face downward pressure in the short term. While a potential recovery is possible if key support levels hold, the current market conditions suggest that further declines are more likely.
For those waiting for an ideal entry point, it might be best to monitor the $0.35 support level closely. If Cardano falls below this level, it could offer a more favorable buying opportunity once the market stabilizes. Until then, the outlook for ADA remains bearish.
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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