Layer 1 (L1) coin Cardano has struggled to break above the $0.7242 resistance level over the past two trading sessions. Altcoins continue to perform poorly following the overall market decline last weekend.
ADA could face further losses in the short term as on-chain data shows a decline in network activity on the Cardano network and bullish sentiment towards the native coin fades.
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ADA trader activity declines as bullish bias fades
According to Santiment data, the number of unique active addresses involved in ADA transactions has steadily declined every day since October 11, the day after the market experienced a record $20 billion liquidation event.
Yesterday, 22,144 unique addresses completed at least one transaction involving ADA tokens, a 31% decrease from Saturday.
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This decline in unique active addresses indicates fewer market participants and waning interest from traders.
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It shows that when fewer participants are involved in an asset, demand weakens and the price becomes more vulnerable to further losses.
According to the data provider, this decline in ADA active addresses is a result of changes in market sentiment as the bullish bias towards altcoins continues to fade. This is reflected in the weighted sentiment of the coin, which remains below the zero line and continues to trend down. At the time of writing, it is at -1.52.
This indicator analyzes social media and online platforms to measure the overall tone (positive or negative) surrounding cryptocurrencies. It takes into account the amount of mentions and the ratio of positive to negative comments.
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A positive weighted sentiment indicates that there are more positive comments and discussions about cryptocurrencies than negative comments and discussions, suggesting that public perception is favorable.
On the other hand, when a negative value is returned, as in ADA, it indicates that negative arguments outweigh positive arguments, reflecting waning skepticism among market participants.
This negative bias could prevent new buyers from entering the market and encourage existing ADA holders to reduce their positions, putting further downward pressure on the coin’s price.
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ADA bears take control: MACD suggests possibility of fall to $0.6179
On the daily chart, readings of ADA’s Moving Average Convergence Divergence (MACD) indicator support this bearish outlook.
At press time, the coin’s MACD line (blue) is below the signal line (orange), and this setup is typically described as indicating high sell activity.
If this situation continues, ADA price may fall to $0.6179. A breakout of this support floor could lead to further decline to USD 0.4665.
On the other hand, if demand returns to the market, ADA could break through the resistance level at $0.7242 and rise to $0.8305.
