Key Takeaways
- ADA’s 30-day MVRV ratio has fallen to -9.34%, a level that has historically preceded price rebounds
- Social dominance is rising, signaling increased attention that could fuel demand and positive sentiment.
- ADA is trading near the upper boundary of a descending channel, showing that bears are losing control.
Cardano’s (ADA) price has suffered a 17% decline over the last 30 days. This has sparked fears of a deeper correction.
However, on-chain metrics and historical price patterns suggest this correction may be a bear trap rather than an extended breakdown.
As ADA trades critical support zone, here is a thorough breakdown of how the altcoin’s price might turn the current outlook into a rebound.
Cardano Metrics Whisper a Turnaround
CCN discovered that the recent price correction has driven Cardano’s Market Value to Realized Value (MVRV) ratio into an accumulation zone. The MVRV ratio identifies if a cryptocurrency is near the market top or bottom.
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When it increases, it indicates rising unrealized profits, indicating holders might be inclined to sell. At this point, the price is close to the local top.
On the other hand, a decline in the MVRV ratio indicates a drop in the unrealized gains, indicating that the price is close to the bottom. According to data from Santiment, ADA’s MVRV ratio has dropped to -9.34%.
Historically, rebounds have occurred when this metric ranges between -18.44% and -5.15%. For example, a similar dip preceded a rally in April from $0.55 to $0.84 in under a month.
A similar pattern played out in February when Cardano’s price surged from $0.60 to $1.13, suggesting the current setup could trigger a bullish reversal again.
Supporting this bullish thesis, Cardano’s social dominance has climbed to 1.02%, indicating rising interest in the market. This metric gauges the share of conversations focused on a specific cryptocurrency relative to others in the top 100 by market cap.
A rising social dominance typically suggests growing attention and potential demand. In ADA’s case, the uptick implies that sentiment could be shifting in its favor.
If this trend holds, it may pave the way for an increase in Cardano’s price.
ADA Price Analysis: Set to Stop Bleeding
From a technical perspective, CCN noticed that Cardano’s price has been trading within a descending channel. However, the current market value is closer to the upper trendline, indicating that bears are not in full control.
In addition, we looked at the Chaikin Money Flow (CMF). The CMF uses volume to measure the level of accumulation and distribution around a cryptocurrency.
When the indicator is below the zero line, it indicates rising selling pressure. But in this case, the CMF is above the zero signal line, indicating that accumulation is outpacing distribution.
Should this trend continue, ADA’s price might break the resistance at $0.69 on the 4-hour chart. If validated, the next area of interest could be around $0.73 near the 0.382 Fibonacci level.
In a highly bullish scenario, Cardano might jump to $0.78. On the flip side, this trend might change if selling pressure outweighs accumulation. Should that be the case, ADA might slide to $0.59.
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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