Cardano (ADA), a prominent cryptocurrency, has been experiencing a notable decline, marking its third consecutive day of losses as of November 4th. In this in-depth analysis, we will explore the multifaceted reasons behind ADA’s price decrease, focusing on weakening on-chain metrics, bearish technical indicators, and the challenges Cardano faces in regaining its market strength.
Table of Contents
Why is Cardano Price Down?
Recent data from Cointelegraph Markets Pro and TradingView indicated a significant drop in ADA’s price—plummeting from a high of $0.363 on November 2 to a low of $0.328 on November 3. This represents a 9.6% decrease, with an additional 2.7% decrease in the last 24 hours, settling the price at $0.332 at the time of writing.
Weakening Onchain Cardano Metrics
A noticeable decline in investor interest and liquidity in Cardano has been detected, aligning with the drop in ADA’s price. Artemis Terminal data highlighted a significant decrease in ADA’s daily decentralized exchange (DEX) trading volume, plummeting from $4.2 million on October 31 to $1.83 million on November 3—the lowest level observed since mid-October.
Moreover, DefiLlama data corroborates the diminishing interest by showcasing a decrease in the total value locked (TVL) on the Cardano network from $248.6 million on September 28 to $208.5 million on November 4. The concurrent decline in daily trading volume, DEX volume, and TVL suggests a reduction in activity and trader engagement in Cardano, which is likely contributing to ADA’s 7% price drop over the last 30 days.
ADA Price Technicals Remain Bearish
The ongoing correction in ADA’s price is attributed to a larger corrective cycle initiated in mid-March, following the token reaching a two-year high of $0.81. The downturn proceeded as traders took profits, given the relative strength index (RSI) on ADA’s daily chart signalled the asset as "overbought."
Moreover, on longer timeframes, ADA’s price trend demonstrates a continuing downtrend within a descending parallel channel, with the RSI standing at 41, further supporting a bearish market disposition.
Cardano Price Faces Uphill Battle
ADA price’s recent retracement indicated further weakness following rejection from the descending channel’s upper boundary at $0.34, which highlighted a robust resistance level. The IntoTheBlock’s Money Around Price (IOMAP) model disclosed that this resistance level was strong enough to withstand buying pressure, evidencing the crucial need for bulls to transform this zone into support to mitigate further declines.
Implications and Outlook
The convergence of weakening on-chain metrics, bearish technical signals, and formidable resistance levels portrays a challenging path ahead for Cardano. To reverse the current downtrend, it is imperative for investor interest, liquidity, and market sentiment to improve significantly.
FAQs
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What does a descending parallel channel indicate?
A descending parallel channel signifies a downtrend where the asset’s price is contained between two parallel lines, showcasing lower lows and lower highs. -
What is a ‘bull’ in cryptocurrency?
A ‘bull’ refers to an investor who believes that the price of a cryptocurrency will rise and may invest based on this belief. -
Why does the RSI matter in technical analysis?
The Relative Strength Index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions. - What is Total Value Locked (TVL)?
TVL refers to the total value of assets staked in a cryptocurrency network, indicating the network’s liquidity and overall investment.
Conclusion
Cardano’s ADA token is facing a critical period marked by diminishing trading volumes, declining TVL, and bearish market signals. For ADA to regain its momentum, a concerted effort from both investors and the broader community will be essential. Maintaining vigilance and conducting thorough research remains paramount for those invested or interested in the evolving dynamics of the Cardano ecosystem.
For additional insights and real-time data, refer to Cointelegraph and DefiLlama, which serve as valuable resources in tracking cryptocurrency market trends and on-chain metrics.
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