Cardano’s (ADA) downward spiral continues as on-chain metrics paint a bleak picture for the cryptocurrency.
The once-promising Cardano (ADA) is facing increasing headwinds as network activity shows signs of significant decline. Data from IntoTheBlock reveals a concerning trend: the number of active addresses involved in ADA transactions has dropped by a substantial 36% over the past week. Simultaneously, the creation of new addresses for trading the altcoin has plummeted by 46%.
This marked decrease in both active and new addresses is a red flag for ADA, indicating waning user interest and declining demand. When fewer people are engaging with a cryptocurrency, it often signals a weakening market sentiment.
Further exacerbating the situation is Cardano’s price-daily active address (DAA) divergence, which has consistently been negative since August 7. This metric compares price movements to changes in the number of daily active addresses, providing insights into the underlying strength of market activity. A negative divergence, as seen with ADA, suggests a disconnect between price and network usage, often indicative of a weakening market.
Whales Abandoning Ship
Adding fuel to the bearish fire, large ADA holders, often referred to as whales, have been actively offloading their coins. A staggering 244% decline in large holders’ netflow over the past month points to increased selling pressure from these influential market participants. Whale selling often acts as a bearish signal, prompting retail investors to follow suit.
Also Read: Cardano On Verge Of Major Upgrade, But Wallet Growth Stands Still
Given the confluence of negative factors, ADA’s price could be poised for further decline. A drop to $0.27, a level it previously touched in August and October 2023, is a distinct possibility. Such a move would represent an 18% decline from the current price.
However, the cryptocurrency market is notoriously volatile. If a resurgence of interest in ADA materializes, a price climb to $0.40 is not entirely out of the question. Nevertheless, the prevailing trends suggest a challenging road ahead for Cardano.
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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