Cardano’s (ADA) price has plunged to $0.60 as the broader market faces intense sell-offs. This decline has erased nearly all of ADA’s chances of bouncing toward the $1 mark.
At the same time, the recent pullback seems to have presented an opportunity for long-term holders.
While ADA remains under pressure amid its hawkish condition, historical trends suggest that the token might still have a brighter future ahead of it even though it might not be short-term.
Key Metric Hints at Potential Cardano Bounce
One key metric for spotting a cryptocurrency’s local top or bottom is the Market Value to Realized Value (MVRV) ratio. The MVRV ratio is a key indicator that helps assess whether an asset is overvalued or undervalued.
A high ratio suggests that many holders are profitable, often preceding selling pressure and potential price corrections.
On the other hand, a low MVRV indicates that the market is in an accumulation phase, where assets are trading below their realized value.
Historically, ADA hits the accumulation phase once the 30-day MVRV ratio is between -22% and -10%.
At this level, if every ADA holder sells, the average return on investment will be lost.
As of this writing, the metric stands at -15%. This indicates that the altcoin is undervalued.
Considering this position, holders are unlikely to keep up the intense selling pressure. Furthermore, Cardano’s price will likely experience relief soon if this happens.
ADA Price Oversold, Forms Bullish Divergence
The technical perspective also seems to share the sentiment. According to the daily chart, Cardano’s price decline has sent the Relative Strength Index (RSI) to the oversold region.
The RSI is a technical indicator that measures momentum, and also shows when an asset is overbought or oversold. When the reading is below 30, it is oversold.
On the other hand, when the reading is above 70, it is overbought. Apart from being oversold, the Chaikin Money Flow (CMF) is another indicator that supports ADA’s rebound.
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The CMF typically measures the accumulation or distribution level around a cryptocurrency. When it falls, it indicates rising selling pressure.
However, the CMF has broken above the signal line, indicating rising buying pressure. If bulls sustain this trend, Cardano’s price might rise above the resistance at $0.68.
Should that be the case, the altcoin’s value might rise to $0.80. If the broader market condition improves, this prediction could be higher.
If so, ADA could climb to $0.80. However, the recent correction might continue if Cardano’s price slides under the 0.786 Fibonacci retracement level at $0.50. In that case, ADA might decline below $0.30.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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