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Cardano’s ($ADA) price has decreased by roughly 18% in the last seven days, aligning with the broader market condition after a period of consistent upswing. But besides the price, Cardano network activity has also felt the heat.
This overall decline around the project has raised concerns about the altcoin’s short-term performance. According to this on-chain analysis, those concerns may be valid.
Cardano Encounters Major Roadblock
On December 8, Cardano’s price rose to a yearly high of $1.22. But today, the cryptocurrency’s value is down to $0.88 due to notable sell-offs. While $ADA holders might anticipate a bounce within a short period, the In/Out of Money Around Price (IOMAP) shows that it could be challenging.
The IOMAP is an indicator that spots on-chain support and resistance. To do this, the indicator looks at the addresses currently in unrealized profits compared to those in losses.Typically, the higher the volume at a price range, the stronger the support or resistance.
According to IntoTheBlock, the major resistance for $ADA lies around $0.92. In this area, 58,470 Cardano addresses accumulated 951.02 million tokens, which is higher than the token in the money between $0.74 and $0.88.
Should buying pressure remain low, then $ADA’s price might find it challenging to rise above the current price. Instead, the token might experience an extended correction.
Data from Santiment supports this sentiment, highlighting a significant drop in Cardano’s network activity. On December 16, the number of 24-hour active addresses stood at over 51,000, but at press time, this figure had fallen to 32,700.
An active address is defined as a wallet involved in a successful transaction—either as a sender or receiver—over a given period. This metric serves as a strong indicator of daily user activity on the blockchain.
A rise in active addresses signals increased user engagement, which is typically bullish for price action. Therefore, the ongoing decline in this metric suggests a bearish sentiment surrounding $ADA.
$ADA Price Prediction: Extended Correction Unavoidable
From a technical perspective, the Exponential Moving Average (EMA) suggests that Cardano’s price could continue to decline. The EMA is an indicator that measures the trend around a cryptocurrency.
On the daily chart, the $ADA price has dropped below the 20 EMA (blue). Dropping below the EMA suggests a bearish outlook. Also, the token’s value is around the same spot as the 50 EMA (yellow).
This position indicates that Cardano is on the verge of losing the support at $0.88. Should this remain the same, $ADA’s price might decrease to $0.77. In a highly bearish scenario, the altcoin’s value might fall to $0.55.
However, if Cardano network activity rises, this trend might change. In that scenario, the cryptocurrency’s value could jump to $1.33.