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Cardano native asset ADA has been painting the chart red with continuous losses over the last seven days. It seems the Cardano network is losing its steam in the crypto market despite a good development team.
Last updated Oct 2, 2022 at 05:06 PM
Posted Oct 3, 2022 at 12:00 PM
ADA has a reputation of being among the top Ethereum killers in the crypto market. In this recent bearish crypto cycle, it seems the Cardano network is losing its steam due to several reasons. We will explore these reasons and try to project the next path for the promising network. Let’s start!
What’s the Current Market Situation?
Cardano (ADA), the eighth most valuable cryptocurrency by market capitalization, has lost 6.3% of its value in the last seven days. According to Coingecko, the asset is currently selling at around $0.43 but remains one of the top ten digital assets due to its market capitalization of around $14.7 billion.
However, the large market value is unable to counteract some negative comments and projections regarding the cryptocurrency launched by the Hong Kong Input-Output (IOHK) led by Ethereum co-founder Charles Hoskinson. The asset has lost more than 30% of its daily trading volume.
CoinGecko
Let’s explore what other factors are affecting the Cardano network performance. Later, we will move to a technical analysis to predict the trajectory of ADA.
Evan Van Ness, a well-known Ethereum realist, and die-hard enthusiast thinks the coin is already on its way out and will soon become a "zombiechain."
Despite his conviction that Ethereum is the best cryptocurrency available, Ness has some concerning facts about Cardano that could mean its demise in the near future.
The ADA network is currently operating at an extremely low transaction rate – fewer than one per second. This is less than the market capitalization of other assets. UniSwap, for example, has a $4.9 billion market cap but outperforms Cardano in terms of daily transactions over seven days.
This is unexpected given UniSwap's substantially greater daily fee count, which is now at $1 million vs ADA's $10,000.
According to Santiment data, financing rates on Binance have been positive for the last two days. According to this interpretation, long positions were paying the funding charge for short positions. Simply put, the indicator indicated that the majority of traders were modestly positive on the futures market. Price action, on the other hand, had yet to reflect this sentiment.
Santiment
Let’s jump right into the technical analysis to understand what can happen next in the Cardano network.
Cardano [ADA] has been traveling south for the last 3 weeks after reaching a $0.51 resistance in September. This decline resulted in a trendline resistance (white, dashed) that consistently spurred selling rallies.
With the price movement unable to break free of its 50 EMA (cyan) barrier, the near-term trend appears to be negative. In the coming sessions, a reversal from its freshly discovered resistance could provide a downside risk. ADA is trading around $0.423.
TradingView
As the 20 EMA and 50 EMA continued to go south over the last few weeks, the near-term story became gloomy. The falling triangle setup showed the sellers' accelerated selling edge as they continued to reduce the peaks while the buyers attempted to protect the $0.438-mark. As a result of the breakdown, the bears flipped this mark from support to immediate opposition.
Then, for more than three days, ADA was compressed in the $0.438-0.4301 area. This path had a rectangle-bottom structure to it. In the coming sessions, the coin could enter a low-volatility phase before a possible breakout.
After the patterning breach, this structure usually leads to a decline. As a result, a closure below the $0.43-support level could signify a sell signal. Buyers might look to re-enter the market in the $0.416 range in this situation. Any rise over the 50-day moving average and the 3-week trendline resistance would indicate a bearish invalidation. The Chaikin Money Flow (CMF) broke above zero, indicating a bullish bias. However, its greater peaks indicate a bearish divergence with the price activity.
The Cardano network is at crossroads. However, the selling triggers and targets will stay the same as previously discussed. To make a lucrative move, traders should consider Bitcoin's movement as well as its repercussions on the broader market. DYOR!!!