The cryptocurrency market has been experiencing a bullish sentiment recently, yet Cardano’s ADA faces a concerning trend: the number of active addresses transacting with ADA is in decline. Despite a surge in ADA’s price, investor activity and whale transactions have decreased sharply, sparking notable worries among market participants.
Why Are Active Addresses Falling?
According to IntoTheBlock data, the daily count of active addresses involved in at least one ADA transaction has plummeted by 36% over the last week. In addition, the creation of new addresses for ADA trading dipped by 46% during the same period, indicating a significant drop in user activity and engagement with the cryptocurrency.
This downward trend in the creation of new addresses and active daily addresses suggests decreasing investor interest and transaction volume. The data indicates that fewer people are using ADA, which leads to a decrease in demand and negatively impacts market sentiment.
What Does The Price-DAA Deviation Reveal?
ADA’s negative price-daily active address (DAA) divergence, consistently showing negative values since August 7, further underscores this trend. This metric highlights a disconnect between ADA’s price movements and its network activity, revealing that price increases are not supported by corresponding increases in active addresses.
The current price-DAA deviation stands at -30.89%. Such a significant negative deviation indicates that even with a price increase, the asset’s weakening network activity reflects reduced interest and engagement from users.
Investor Takeaways
Key Insights for Investors:
- A continuous decrease in active addresses can indicate a bearish market sentiment for ADA.
- A significant drop in whale transactions may lead to a sell-off by individual investors.
- Potential price targets could fluctuate significantly based on demand and market trends.
Possible Price Scenarios
Despite recent price increases, continued declining demand could see ADA drop to $0.27, a level last observed in October 2023. This potential fall represents a near 20% decrease from its current price of $0.3397. Conversely, if demand for ADA revives and bullish trends take hold, prices could rebound to $0.40.
Investors should closely monitor these trends to make informed decisions, considering both the declining user activity and the potential for significant price movements.