Cardano (ADA) recently experienced a notable increase in transaction volume, which initially seemed positive. However, the corresponding price trend may indicate a disconnect. According to Santiment, ADA’s transaction volume dropped from around $600 million to approximately $300 million on January 14, and remained low until a spike on January 23. At the time of writing, the volume was over $560 million, with a roughly 30% increase in the last 24 hours reported by 21milyon.com.
Despite the increased trading activity suggested by the volume trend, the price trend indicates that the volume might be having a negative impact on ADA. Over the past four days, Cardano showed a consistent downward trend in its daily chart, with a roughly 10% drop during this period. At the time of writing, ADA was trading at $0.46, reflecting a 2.5% decrease.
Technical indicators such as the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) further highlighted the weakness in the price trend. The RSI was below 40 and still declining, signaling a strong bearish trend that could be approaching the oversold territory. Additionally, the MACD being below zero could confirm the bearish signals from the RSI, suggesting that the transaction volume may be dominated by selling activity, potentially leading to further price declines.
Analysis of Cardano’s 7-day Market Value to Realized Value (MVRV) ratio on Santiment indicated that holders might be facing double-digit losses. At the time of writing, the MVRV was around -16.6%, suggesting holders had incurred losses above 16%. The parallel analysis of the 30-day MVRV showed nearly the same scenario, with a -17% MVRV reflecting losses for holders during that period.