25 May

Cardano (ADA) has seen a 5.42% decline in value over the past week, making it one of the worst performers among the top 20 cryptocurrencies. Despite this familiar position, some market participants view this as a potential buying opportunity.

To provide more context, ADA's price at the time of writing was $0.45. This recent decline has impacted the volume of profitable and unprofitable transactions on the Cardano network.

Cardano ceases to give and continues to take

As of press time, Santiment said that the amount of daily on-chain transactions represented a profit-to-loss ratio of 0.827. More participants are realizing gains than loses if this ratio is greater than 1.

ADA's trend would have been bullish in this situation. But compared to every on-chain transaction that experienced a loss, the reading above showed that just 0.827 transactions resulted in profits.

This measure appears to be correlated with the price historically. In February, for example, the ratio reached 0.722. The cost of ADA was $0.57 at the time. The price surged to $0.73 on the charts a few weeks later.

A comparable situation occurred on April 13th when a similar ratio decline prompted ADA's rebound from $0.43 to $0.52. Given its historical patterns, there's a possibility that Cardano could experience further decline.

In such a scenario, the cryptocurrency's value might decrease to $0.42. However, there's also a strong likelihood that ADA could see a 20% increase, potentially reaching $0.50 in just a few days.

There's now an entrance level

Furthermore, one signal that may be used to forecast the valuation of ADA is the price-DAA divergence. The term "DAA" stands for "Daily Active Addresses," which are used to gauge network activity overall.

The metric can be used to determine possible entry and departure points in conjunction with price. The price-DAA was -38.88% at the time of publication. In terms of trading, a measure less than 0.50 indicates a buy signal.

Conversely, a sell signal is generated when the divergence reaches 0.90 or higher. Given that the ratio was 0.388, it appeared to indicate that, in order to avoid price spikes, Dollar Cost Averaging (DCA), Cardano's native coin, may be initiated.

It's crucial to remember that this indicator cannot predict Cardano's future on its own.

On-chain data showed that the metric increased on the charts when the same was assessed using the volume. This suggests that there will be more purchasing and selling. On the other hand, the price action would seem to indicate that sales have outpaced accumulation.

As previously said, ADA may experience another downturn as long as this is the case. But if the drop becomes too steep, the token can rise to its annual high once again.

May 2024, Cryptoniteuae

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