Cardano (ADA), one of the top cryptocurrencies by market cap, has seen its price struggle to regain the highs it reached in 2022. Despite broader market conditions affecting its performance, specific on-chain factors have contributed to ADA’s recent underperformance. This analysis explores the key obstacles that have held Cardano back from reaching its potential.
Supply Wall At $1.04 – A Major Obstacle
A significant factor hindering Cardano’s price movement is the supply wall at $1.04. On-chain data from the Global In/Out of Money (GIOM) metric shows that over 1 million addresses accumulated more than 2 billion ADA around this level. The GIOM tracks addresses based on their profit positions, whether they are in profit, breaking even, or out of money.
This metric highlights that a massive cluster of addresses exists at the $1.04 level, creating strong resistance. Essentially, the larger the number of addresses holding ADA at a specific price point, the more difficult it becomes for the price to break through.
At the same time, the chart reveals that a large number of addresses hold ADA in the $0.35 range, where the current price of $0.37 is located. With higher volume around $0.35 to $0.66, Cardano could potentially move upward. However, the supply wall at $1.04 looms as a critical barrier.
Mean Dollar Invested Age (MDIA) Signals Bearish Sentiment
Another contributing factor to ADA’s sluggish performance is the Mean Dollar Invested Age (MDIA), which measures the average age of dollars invested in a cryptocurrency. In a bullish market, a declining MDIA indicates that whales are moving dormant coins back into circulation, which typically boosts prices. However, ADA’s 90-day MDIA has been steadily increasing.
This upward trend in MDIA suggests that long-term holders are not moving their ADA, signaling a lack of investor activity. Without fresh momentum or renewed interest from these major holders, ADA’s price growth is likely to remain limited, amplifying the bearish pressure.
Technical Analysis – Bearish Patterns Persist
From a technical standpoint, ADA faces additional challenges. Currently trading at $0.37, the token is forming a head-and-shoulders pattern on its daily chart, a bearish reversal signal. This pattern often indicates an acceleration in downward price movements, and Cardano is already experiencing resistance at current levels.
If the bearish trend continues, ADA could face a further decline toward $0.32 in the short term. This technical pressure compounds the impact of on-chain data, presenting a bleak outlook for ADA in the near future.
Despite these short-term challenges, there may still be room for optimism if broader market conditions improve. Historically, Bitcoin’s price movements have had a significant impact on altcoins like Cardano. If Bitcoin (BTC) breaks above $70,000, analysts believe ADA could benefit from renewed investor confidence, pushing the token toward $0.61 or even closer to the critical $1 level.
Also Read: Cardano (ADA) Grows By 2,000 Followers – Can It Surpass Bitcoin As Hoskinson Predicts?
However, ADA’s path to recovery depends heavily on overcoming its supply wall and seeing increased investor activity. Without these key shifts, ADA’s price may continue to hover below expectations.
Cardano’s recent price struggles stem from a combination of technical and on-chain factors, most notably the supply wall at $1.04 and a rising Mean Dollar Invested Age. While the short-term outlook appears bearish, ADA could see a price boost if Bitcoin’s performance improves and market conditions shift in its favor. Until then, the token faces significant resistance and a challenging road ahead.
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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