The price of Cardano (ADA) has dropped around 18% over the past seven days, in line with the broader market situation after a period of consistent growth. However, besides price, operations on the Cardano network are also under considerable pressure.
The overall decline surrounding the project has raised concerns about the short-term performance of this altcoin. According to on-chain analysis, those concerns may be well-founded.
Cardano Hits Big Hurdles
On December 8, Cardano’s price climbed to a yearly high of $1.22. But to date, the value of this digital currency has decreased to 0.88 USD due to significant sales. While ADA holders can expect a near-term recovery, In/Out of Money Around Price (IOMAP) suggests it may not be easy.
IOMAP is an indicator that identifies on-chain support and resistance. To do this, the indicator looks at addresses that currently have unrealized profits compared to addresses that are losing money. Typically, the higher the volume at a price, the stronger the support or resistance.
According to IntoTheBlock, the main resistance for ADA is located around the $0.92 level. In this region, 58,470 Cardano addresses have accumulated 951.02 million Tokens, higher than the amount of Tokens in the coin fluctuating between 0.74 USD and 0.88 USD.
If buying pressure continues to be weak, ADA price may have difficulty breaking above current levels. Instead, the Token may undergo a prolonged correction.
Data from Santiment supports this view, pointing to a significant decrease in Cardano network activity. On December 16, the number of active addresses in 24 hours exceeded 51K, but at the time of writing, this number had decreased to 32,700.
An active address is defined as a wallet that participates in a successful transaction — either as a sender or receiver — within a specified period of time. This measure is a strong indicator of daily user activity on the blockchain.
An increase in active addresses signifies increased user participation, which is often beneficial for price action. Therefore, the ongoing decline in this gauge indicates bearish sentiment around ADA.
ADA Price Forecast: A Prolonged Correction Is Unavoidable
From a technical perspective, the Exponential Moving Average (EMA) suggests that Cardano’s price could continue to decline. EMA is an indicator that measures the trend surrounding a Cryptocurrency.
On the daily chart, ADA price has dropped below the 20 EMA (blue). A drop below the EMA signals a bearish outlook. Additionally, the value of the Token is located roughly in the same position as the 50 EMA (yellow).
This position shows that Cardano is close to losing support at $0.88. If this continues, ADA price could drop to $0.77. In an extremely pessimistic scenario, the value of the altcoin could drop to $0.55.
However, if Cardano network activity increases, this trend could change. In that case, the value of the Cryptocurrency could jump to 1.33 USD.