Points
- Cardano （ADA） price drops to $0.30, nearing bear market lows.
- The sharp drop marks the most significant three-day sell-off since 2022.
- ADA’s price decline indicates more pain ahead for investors.
- Technical indicators suggest a potential further drop to $0.27.
- Investors should exercise caution amid the bearish market conditions.
The hope of a potential bull market has been dealt a huge blow following a wider market downturn, which saw altcoins, including Cardano （ADAUSDT）, hit low prices they hadn’t reached in almost a year.
ADA’s Significant Price Drop
At press time, ADA’s price is $0.30. This is one value it has failed to notch since November 2023. How has this affected token holders, and what’s next?
Market Analysis and Investor Impact
The Sharp Drop and Its Implications
The sharp drop in ADA’s value marks the most significant three-day sell-off since the bear market of 2022. While Cardano may recover, data from the In/Out of Money Around Price （IOMAP） shows the road is not yet clear.
The IOMAP classifies addresses based on those profits, losses, and breakeven points at several price ranges. The higher the number of addresses at a price level, the stronger the support or resistance it offers.
Technical Indicators and Support Levels
In/Out of Money Around Price （IOMAP）
According to IntoTheBlock, the total number of addresses in profits and purchased ADA between $0.28 and $0.30 are not up to the addresses lying in losses at $0.31.
Specifically, 106,850 addresses hold a total of 572.21 million tokens at $0.31. In contrast, only 35,460 addresses are profitable and purchased 451.95 million between $0.28 and $0.30.
Considering the difference in addresses, Cardano may lose its hold on support at $0.30 due to the waiting sell-offs. If this happens, the cryptocurrency may face another decline. This time, it could drop as low as $0.28.
Market Value to Realized Value （MVRV） Long/Short Difference
Beyond that, the Market Value to Realized Value （MVRV） Long/Short Difference is -10.79%. The MVRV difference shows if long-term holders are realizing more profits than short-term holders.
When the reading is positive, it means that long-term holders are realizing more profits. However, since it is negative for ADA, it implies otherwise.
This decline could also mean that the cryptocurrency is getting close to a bear phase, as a reading at -19.33 % historically shows that a token may no longer be in a bullish cycle. Should ADA’s price decline again, the chance of a fall into the bear market will increase.
ADA Price Prediction: Correction to Continue
Since August 2, multiple sell signals have appeared on Cardano’s daily chart, which is one reason the token experienced an accelerated drawdown.
For example, the Supertrend, which shows price direction and generates buy and sell signals, was above ADA when the price was $0.42. Typically, if the red segment of the Supertrend is above the price, it is a sell signal. When the green area is below the price, the indicator flashes a buy signal.
Therefore, it is not out of place to assume that Cardano had exhibited signs of a collapse before this day. The parabolic stop-and-reverse （SAR） was in a similar situation.
Parabolic SAR Analysis
Like the Supertrend, it shows direction and can identify an entry and exit point. A look at the chart above shows that the parabolic SAR flashed a similar sign when ADA traded at $0.42 as the dotted lines positioned above the price.
Furthermore, the prevailing market structure indicates weakness, suggesting that ADA may undergo another correction. The Fibonacci retracement, a technical using percentages to spot resistance and support points reinforces this prediction.
ADA’s price is below the 23.6% nominal pullback, indicating that the bears were in full control of the price action. If selling pressure increases, the cryptocurrency’s value may drop to $0.27.
Conclusion: Proceed with Caution
Investors and traders should exercise caution as the market might follow the downward spiral that started with the correction phase that started last week. By monitoring technical indicators and key support levels, investors can make more informed decisions in navigating the current market conditions.
解説
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解説
- Bear Market: A prolonged period of declining prices in a financial market, typically marked by a decline of 20% or more from recent highs. It is often accompanied by widespread pessimism.
- In/Out of Money Around Price （IOMAP）: A metric that shows the distribution of addresses that are in profit, at breakeven, or at a loss based on their average purchase price. It helps identify support and resistance levels.
- Market Value to Realized Value （MVRV）: A ratio used to assess whether an asset is overvalued or undervalued by comparing its current market value to its realized value （the value of coins at the time they last moved on-chain）.
- Supertrend: A trend-following indicator used in technical analysis to identify the current trend direction. It generates buy and sell signals based on the asset’s price movements.
- Parabolic SAR （Stop and Reverse）: A technical analysis indicator that helps identify potential reversal points in an asset’s price trend. It places dots above or below the price to indicate the direction of the trend.
- Fibonacci Retracement: A technical analysis tool that uses horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before the price continues in the original direction.
Cardano’s current market position underscores the challenges faced by many cryptocurrencies in the current economic environment. By understanding these technical indicators and the broader market context, investors can better navigate the potential risks and opportunities ahead.