As a seasoned crypto investor with over a decade of experience navigating the volatile digital asset market, I have seen my fair share of bull and bear markets, and learned to read between the lines when it comes to price movements and on-chain metrics.
As a crypto investor, I noticed that the price of Cardano started to consolidate on Saturday following indications of market instability on the Bitcoin chart. The asset appeared to break down from a bearish configuration, hinting at potential further drops. Yet, the much-anticipated Alonzo hard fork (Chang upgrade) is drawing nearer, with 79% of nodes already migrating to v9.1.0. Cardano’s annual inflation rate stands impressively low at 2.5%, outperforming other chains in this regard. Nevertheless, I wonder if these advancements will be sufficient to shield ADA from the impending downturn.
Will Cardano Price Respond to Low Inflation Rate?
Compared to networks like Solana, Avalanche, Cosmos, and Polkadot, the Cardano network stands out for its stability. As stated by ADA Whale, the annual inflation rate on Cardano is only 2.5%, which is less than that of these other chains. This lower inflation rate suggests a steady and consistent development within the network.
Cardano had an inflation of 2.5% over the last 1y. For comparison, Sol: 14%. Avax: 15%. Cosmos: 13%. Dot: 10%
Cardano has achieved stable, significant levels of adoption with low inflation
These are what we call the fundamentals. And it explains why Cardano will remain up there
— ADA whale (@cardano_whale) August 8, 2024
Furthermore, on August 9th, Cardano underwent the Hydra update, boosting its capacity to handle more transactions. With the upcoming Chang hard fork also in the works, these advancements could potentially push the value of ADA above $1 for the first time.
Cardano Price Analysis
In simpler terms, the current trend for ADA appears to be declining over the short term. A recent breakout from an ascending triangle formation (known as a ‘rising wedge’) often signals a bearish reversal. This breakout might hint at more possible price drops in the future.
As a crypto investor, I’ve noticed that the price action is currently trending below not only my 50-day average ($0.3457) but also my 200-day average ($0.3788). This downward trend seems to be further validated by the exponential moving averages (EMAs). In other words, it appears we’re in a bearish market for Cardano.
- Resistance 1: The 50 EMA at $0.3457.
- Resistance 2: The 200 EMA at $ 0.3788.
- Support: Around $0.28.
In simpler terms, the Relative Strength Index (RSI) currently stands at 40.42, which means it’s nearly in the “oversold” region. This suggests that although the downtrend is intense, there might be a point soon where investors could potentially start purchasing the asset.
As a crypto investor, I’m observing that the Chaikin Money Flow (CMF) for ADA stands at -0.14. This suggests a stronger outflow of capital from ADA compared to inflows, mirroring the prevailing bearish sentiment in the market.
Should the cost of ADA fall beneath the $0.28 holding point, it might escalate into an extension of the downward trend we’ve been witnessing. In this scenario, Cardano may look for fresh support near the $0.24 range.
On-Chain Metrics Support Short-Term Drop
As an analyst, I observed a decrease of approximately 2.99% in Cardano’s open interest across exchanges over the past 24 hours. According to Coinalyze, the cumulative ADA volume delta stands at -97.5M, suggesting that long positions are being closed and short ones might follow shortly. This could be a sign that the Cardano price may continue its downward trend.
Moreover, data from Messari Research shows that the number of transactions on the Cardano blockchain hit a 12-month minimum on August 11, suggesting less network usage. The decrease in transaction numbers seems to point towards decreasing investor confidence, an aspect possibly mirrored in the value of Cardano.
Despite a recent drop in Cardano’s price by 5.4%, trading at approximately $0.331, there’s evidence suggesting it could soon become bullish. This optimism arises from data indicating a 47% increase in Cardano’s volume over the past 24 hours on CoinGecko. The discrepancy between rising volume and falling price is often seen as a bullish sign, particularly when followed by a market correction.
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2024-08-12 10:16