Could Cardano’s Resurgent Network Activity Influence ADA’s Price Recovery?

• Cardano (ADA) is experiencing a resurgence in network activity, but analysts question whether this will translate into sustained price gains.

• Despite crossing the $1 threshold recently, ADA has faced a setback with a 6% price correction over the past day.

• Notably, IntoTheBlock reported a spike in new user addresses, signaling potential bullish momentum for ADA.

Cardano (ADA) has surged in network activity yet faces challenges, including a recent price drop. Can this momentum lead to a breakout for ADA?

Cardano’s Network Activity Hits New Heights

Cardano (ADA) has recently shown impressive network activity, reaching levels not seen since early 2023. COINOTAG highlighted that ADA’s price hit the notable $1 mark last week; however, after this achievement, market pressure caused a quick correction. Currently, ADA is trading at approximately $0.984 with over 2.97 million addresses remaining profitable, representing around 67% of all ADA holders. Such figures indicate a significant level of investor confidence despite recent fluctuations.

The surge in activity can be attributed to a notable increase in new addresses, which represents incoming investors and users. IntoTheBlock also pointed out that long-term holders are exhibiting confidence, as the number of addresses that have held ADA for more than one year remained stable, showcasing strong backing from existing supporters.

Source: IntoTheBlock

Prospects for a Potential Breakout

With the current price action, analysts at COINOTAG evaluated whether the recent uptick in network activity would be sufficient for ADA to surpass its recent thresholds. Despite the promising metrics, ADA retraced from the recent rally, prompting concerns among traders. At the time of writing, ADA remains below a critical resistance level of $1.

Interestingly, alongside the price drop, ADA’s trading volume has also decreased, a trend that often indicates a potential trend reversal. However, the decline in social volume suggests waning public interest in Cardano, a factor that could hinder its recovery. Additionally, ADA’s MVRV ratio has contracted due to this recent price adjustment.

Source: Santiment

Moreover, technical indicators suggest that while bulls currently maintain a lead, ADA is testing significant support levels near its 9-day moving average (MA). Should ADA fall below this threshold, the possibility of a downturn into the $0.6-$0.8 range looms. Conversely, if the uptrend in network activity continues and drives market sentiment, ADA may once again approach the vital resistance of $1, with potential to rally toward the $1.5 target if a breakout occurs.

Source: TradingView

Conclusion

In summary, while Cardano has experienced a notable uptick in network activity and strong support from its long-term holders, the price correction and declining trading volumes pose challenges. The coming days will be pivotal—ADA must maintain stability above its moving averages to avoid a potential plunge, while continued growth in network activity could re-energize investor sentiment and set the stage for a significant breakout. Traders should remain vigilant as market dynamics evolve.