Key Metrics Highlight Declining Demand
Cardano (ADA) experienced a 6% price drop on Monday, trading below $0.58 and extending a 10% decline from the previous week. This price movement is attributed to a combination of decreasing network activity and an increase in bearish positions within the derivatives market.
At the time of reporting, ADA was being exchanged at $0.57. The recent downturn occurred after the price encountered resistance near the $0.70 level. Several on-chain and technical indicators are currently supporting this bearish sentiment.
Falling Network Activity and Derivatives Data Signal Weak Demand
According to Santiment, Cardano's Daily Active Addresses saw a decline, falling to 24,280 on Monday from 32,115 recorded on October 11. This metric has shown a consistent decrease since August, indicating a reduction in user interest and engagement with the Cardano blockchain.
A reduction in daily address activity is typically interpreted as a signal of weakening network demand, as fewer users are actively participating in transactions or interacting with the network.
Concurrently, data from CoinGlass revealed that the ADA long-to-short ratio dropped to 0.75 on Monday, marking the lowest level observed in the past month. A ratio below one signifies that a greater number of traders are anticipating a price decline for ADA compared to those expecting a rise.
Technical Signals Suggest More Downside, but Signs of Recovery Emerge
Momentum indicators continue to suggest bearish pressure. The Relative Strength Index (RSI) has fallen to 32, positioning it below the neutral 50 mark, which indicates that ADA is approaching oversold territory.
The Moving Average Convergence Divergence (MACD) on the daily chart is exhibiting signs of diminishing bullish momentum. The histogram bars are becoming smaller, and the MACD lines are converging, which is often interpreted as a bearish signal.
ADA experienced rejection near the $0.70 mark last week and has since seen a significant decline. Should the downtrend persist, the next anticipated support level is estimated to be around $0.49.
However, analysts have noted that a substantial number of large holders have recently moved their ADA holdings off exchanges, which could indicate long-term accumulation strategies. Furthermore, over 100,000 new wallets have been established in the last 60 days, despite the ongoing price decrease.
Some chart analysts are observing the potential formation of a double-bottom or an inverted head-and-shoulders pattern around the $0.58 level. A successful breakout above $0.66 could potentially trigger a recovery, with price targets in the $0.74–$0.80 range. Nevertheless, the short-term outlook remains cautious, given that the price is currently trading just below the critical $0.60 support area.