Cardano (ADA) made headlines early Friday morning as long-dormant ADA tokens sprang into action, accompanied by a significant increase in daily active addresses. However, despite this flurry of activity, ADA’s price has remained stagnant, casting doubt on any imminent bullish momentum.
Dormant ADA Tokens Awaken
According to data from Santiment, ADA’s “age consumed” metric soared to a seven-day high of 6.33 billion. This figure tracks the movement of coins that have been held for long periods without being traded. Such spikes often signal a shift in market sentiment, as long-term holders typically move their assets in response to a potential trend reversal.
The movement of these dormant tokens was coupled with a rise in the number of active addresses. Santiment reported that 54,200 addresses were involved in ADA transactions—marking the highest single-day activity since March 6. This level of participation typically points toward increased interest in the asset, often a bullish indicator for altcoins.
Mixed Signals – Bullish Address Activity, Bearish Price Action
Despite the increase in active addresses, ADA’s price has not mirrored the same optimism. Instead, the coin’s muted price action over the last 24 hours raises concerns that the token movements may not be tied to a bullish breakout. Rather, they may signal a local top, hinting that ADA could face further declines.
This seeming contradiction between increased on-chain activity and stagnant price behavior suggests that while trading activity has surged, traders may be taking profits or preparing for more downside movement.
Technical Analysis Points to Further Declines
Cardano’s price chart suggests a bearish outlook. The Parabolic Stop and Reverse (SAR) indicator, often used to signal trend reversals, shows dots above ADA’s current price, which implies continued bearish momentum.
Additionally, the Moving Average Convergence Divergence (MACD) indicator paints a similar picture. With the MACD line positioned below the signal line and the zero line, this downward cross signals that ADA is gaining downward momentum. Traders often view this setup as a sell signal, reinforcing the bearish outlook.
If the current trend persists, ADA’s price could revisit its low of $0.27 from August 5.
Also Read: Cardano Hits Record 35,000 ADA Daily Volume, Powered By Snek.Fun’s 20,000-User Surge
Potential for a Rebound?
Despite the pessimistic technical indicators, a resurgence in buying demand could reverse ADA’s fortunes. If Cardano sees increased interest and trading volume, the coin could break past the critical resistance level of $0.39. Surpassing this barrier could set the stage for an upswing, with a potential target of $0.48.
However, in the absence of renewed bullish sentiment, ADA may struggle to hold its ground, and traders should brace for more downside pressure.
While the movement of dormant ADA tokens and the spike in active addresses suggest heightened interest in the altcoin, its muted price response and bearish technical indicators indicate that caution is warranted. Traders will need to watch for key levels of support and resistance to gauge whether ADA is headed for further declines or poised for a potential comeback.
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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