Cardano (ADA) has been riding the waves of a broader cryptocurrency market surge, but recent on-chain data suggests the tides may be turning. With selling activity on the rise and key technical indicators showing a slowdown in demand, ADA could be facing a significant price correction in the coming weeks.
Profit-Taking Signals Weakening Buying Pressure
One of the first signs of a potential downturn is the behavior of Cardano holders. According to the Chaikin Money Flow (CMF) indicator, capital inflows into the ADA market have been steadily declining. While the CMF remains positive—indicating that buying pressure still exists—the weakening trend is a red flag for traders.
The CMF tracks the flow of capital into and out of an asset, and a positive but declining CMF suggests that buyers are becoming less aggressive. Essentially, while people are still purchasing ADA, they’re doing so with less enthusiasm, a cautionary signal that demand may soon taper off. This waning momentum could pave the way for increased selling pressure, pushing ADA’s price downward.
Daily Active Address (DAA) Divergence Confirms Bearish Trend
Further adding to the bearish outlook is Cardano’s daily active address (DAA) divergence, which is currently at -43.3%. The DAA divergence compares an asset’s price movement with its number of daily active addresses. A negative reading indicates that the number of active participants in the ADA market is not keeping pace with the asset’s price gains.
The fact that this metric has been in the red since early September suggests that ADA’s recent rally has not been fueled by a genuine surge in demand from traders. Instead, it may be riding the coattails of the broader market upswing. This divergence highlights a potential overvaluation, increasing the likelihood of a price correction.
ADA Price Prediction – 29% Drop Looms
At its current price of $0.39, Cardano’s technical indicators are showing signs of weakness. The Ichimoku Cloud, a popular tool for identifying support and resistance levels, indicates that ADA is approaching a critical support zone. If Cardano’s bulls fail to defend this level, the altcoin could see a 29% drop, potentially falling to $0.27, the price last seen on August 5.
The Ichimoku Cloud often signals market reversals, and when an asset’s price dips below the cloud, it suggests that bullish momentum is losing steam. Cardano’s current position near the cloud reinforces concerns that the upward movement may be coming to an end.
Despite the bearish indicators, ADA could still stage a comeback if market conditions shift. Should demand for Cardano rise again, the altcoin may rally toward the $0.47 resistance level. However, for this to happen, traders will need to see a significant uptick in buying pressure and positive market sentiment.
With a declining CMF, negative DAA divergence, and Cardano’s price teetering near its Ichimoku Cloud support level, the altcoin appears poised for a potential 29% drop. Unless ADA bulls can mount a strong defense, traders should brace for a bearish downturn. On the flip side, a sudden rise in demand could propel ADA back toward $0.47, though that scenario seems less likely given current market conditions. As always, cautious optimism and vigilant market monitoring are advised for those holding ADA in the coming weeks.
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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