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Will this reduce the price?
Cardano (ADA), the third-generation blockchain platform, mirrors a climber clinging to a precarious ledge. After a brief rise earlier this month, the price fell again, leaving investors to question the strength of the current rally.
While the recent increase in active addresses suggests renewed interest, technical indicators and declining trading volume paint a picture of an uncertain future.
Cardano at the crossroads
Cardano’s current price action presents a complex picture. The recent rally offers a glimmer of hope, but technical indicators and declining volume suggest a possible continuation of the downtrend.
While its impact is still unknown, the increase in active addresses is a promising indication of a possible resurgence of interest. It will take time to see whether ADA can emerge from the dark clouds and begin its rise with greater confidence.
Cardano’s uphill battle: the price fight for traction
For ADA holders, May began with a ray of hope. After a three-day rally, the price increased from $0.45 to $0.46. However, a series of losses soon erased these gains, bringing the price back to the $0.45 region, which is where it was previously. This pattern of stops and starts highlights how the ADA suffers from a lack of coherent propulsion.
Total crypto market cap currently at $2.294 trillion. Chart: TradingView
As of today, a small rally has brought ADA back to the $0.45 zone, offering a temporary reprieve. But lurking beneath the surface is the persistent downtrend, a fact confirmed by the Relative Strength Index (RSI) which hovers just above 40. This metric suggests weak buying pressure and the potential for further price declines.
Source: CoinMarketCap
To make matters worse, a technical indicator known as the “cross of death” looms on the horizon. This disturbing pattern occurs when the short-term moving average rises above the long-term average, often signaling a bearish price trend.
With ADA currently trading below both of these averages, the threat of a death cross adds an additional layer of uncertainty to the price trajectory.
The quiet streets of Cardano: trading volume dampens enthusiasm
Trading activity on the Cardano network hasn’t exactly been brisk. Volume, which had risen to more than $400 million in early May, has since fallen to about $275 million. This significant drop suggests a decline in investor interest, which may act as a brake on price increases.
Source: Santiment
Typically, a healthy increase in volume accompanies sustained price increases, indicating strong buying and selling activity. In the case of Cardano, the muted volume paints a worrying picture of a market lacking conviction.
Active addresses show a temporary increase
A lone bright spot emerges in the form of Cardano’s active addresses. This metric tracks the number of unique addresses participating in transactions on the network. There has been a recent increase in seven-day active addresses, with the number rising from around 155,000 to over 160,000.
While this increase is encouraging, some analysts believe it may not be substantial enough to have a significant impact on trading activity and trigger a sustained price reversal.
Featured image of InspiredPencil, chart by TradingView