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Cardano (ADA) faces mounting challenges as over 260,000 addresses holding $2.77 billion in ADA struggle to break even amid bearish trends.
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Recent on-chain data reveals that many short-term holders are liquidating their assets, further pressuring the altcoin’s already stagnant price performance.
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“The current market sentiment suggests that a significant downturn could push ADA’s price toward $0.32,” reports COINOTAG, highlighting a bearish head-and-shoulders pattern observed on the charts.
This article explores the current state of Cardano (ADA), detailing price struggles, key on-chain metrics, and price predictions for the altcoin.
Cardano Faces Significant Price Resistance Amid Bearish Trend
Cardano’s (ADA) recent performance indicates a concerning trend, with the altcoin remaining stuck in a narrow trading range between $0.34 and $0.36. On-chain metrics depict a challenging scenario for investors as many holders are looking to break even. The In/Out of Money Around Price (IOMAP) metric reveals that over 260,000 addresses have purchased approximately 6.68 billion ADA within this price range, representing a significant amount of capital at an average cost of $0.34. This translates to a total investment value of $2.77 billion, further complicating the potential for a price rebound in the near term.
Understanding On-Chain Metrics: The IOMAP Analysis
The IOMAP analysis categorizes addresses based on their acquisition price in relation to the current ADA price, highlighting the levels of support and resistance. With many holders sitting at a loss, they may be inclined to sell as prices fluctuate, which could act as a barrier to any upward movement in ADA’s value. According to analysis from COINOTAG, the notable resistance exists within the $0.34 to $0.36 range, suggesting that ADA’s price may be capped as long as these investors remain eager to exit their positions.
Short-Term Selling Pressure and its Impact on ADA
Further compounding these challenges is the recent trend of short-term holders selling off their ADA holdings. The Balance by Time Held metric indicates that many investors who bought ADA in the last 30 days to 12 months are now choosing to liquidate. This heightened selling activity signals declining confidence and could result in additional downward pressure on ADA’s price if it continues.
Technical Analysis: Head-and-Shoulders Pattern Indicates Bearish Outlook
Technical analysis reveals that ADA has formed a classic head-and-shoulders pattern, which typically suggests a reversal from bullish momentum to bearish trend. The critical neckline of the pattern is situated around $0.34. If ADA fails to maintain this support level, a decline of approximately 6% could ensue, bringing the price down to $0.32. Conversely, should market conditions bolster demand, and buyers defend the $0.34 mark, a rebound could see ADA retest the resistance level near $0.42.
Future Outlook for Cardano (ADA)
Despite optimistic investor expectations, current on-chain and technical indicators convey a more cautious outlook for ADA. The combination of significant resistance from investors looking to break even and selling pressure from short-term holders suggests potential continued volatility ahead. For ADA to reclaim bullish momentum, it will need to establish a solid foothold above the $0.34 support and attract renewed buying interest.
Conclusion
The current landscape for Cardano (ADA) remains fraught with challenges, notably from both on-chain metrics and technical analysis. As over 260,000 addresses aim to recover their investments, the price may struggle to ascend past the existing resistance levels. Stakeholders should remain vigilant, as any shifts in market sentiment could play a pivotal role in shaping ADA’s next moves. For now, careful analysis and preparedness for potential downturns seem prudent amidst the prevailing bearish sentiments.
