In recent weeks, Cardano (ADA) has experienced a notable decline in value, impacting numerous investors. On-chain data reveals a higher frequency of daily transactions resulting in losses compared to those yielding profits. Over the last month, ADA’s value plummeted nearly 10%, sparking concerns about its future trajectory.
What Do Daily Transactions Indicate?
ADA’s price dipped to $0.42 before a partial recovery. The consistent decrease in value led to most holders incurring losses in their transactions. The analysis of ADA’s daily transaction volume showed a profit/loss ratio of 0.94, indicating that profitable transactions were outnumbered by those resulting in losses. When this ratio falls below 1, it often points to a stronger selling pressure compared to buying pressure. Presently, 2.62 million addresses, or 59% of all ADA holders, are experiencing investment losses.
What Are the Technical Indicators Saying?
Data from ADA’s Elder-Ray Index suggests a potential continued decline in ADA’s value in the short term. This indicator, which evaluates the market strength of buyers versus sellers, showed a negative value of -0.038, indicating bear dominance. Additionally, ADA’s relative strength index (RSI) was trending downward at 41.94, signifying higher selling pressure than buying activity. However, the market value/realized value (MVRV) ratio suggests a possible buying opportunity at the current levels, which could potentially drive the price up to $0.479.
Key Inferences for Investors
– ADA’s profit/loss transaction ratio below 1 indicates stronger selling pressure.
– A negative Elder-Ray Index value suggests bear dominance in the market.
– RSI trending downwards reflects higher selling activity.
– MVRV ratio points to a possible buying opportunity at current price levels.
In conclusion, 59% of ADA holders, equivalent to approximately 2.62 million addresses, are currently facing losses. Technical indicators like the Elder-Ray Index and RSI point towards a potential continued value decline for ADA in the short term, with bear strength dominating the market sentiment. However, the MVRV ratio presents a glimmer of hope for a price rebound.
