- Cardano price drop 30% twice in four months, with the $0.2535 to $0.2446 order block breaking the fall both times.
- With this demand zone holding as a support level, ADA may be due for an upward correction toward $0.3000.
- On-chain metrics show steady rise in social dominance alongside a positive index for its MVRV ratio.
- Invalidation of this bullish outlook will occur if the altcoin records a decisive daily candlestick close below $0.2446.
Cardano (ADA) price has been trading with a bearish bias over the last two months, shedding all the ground covered in the July 13 rally. In part, the US Securities and Exchange Commission (SEC) branding ADA a security has cast a dark cloud over the altcoin, placing it at a disadvantage alongside peers like Polygon (MATIC) and Solana (SOL).
Cardano price poised for retaliation
Cardano (ADA) price appears to have found support, offered by the demand zone between the $0.2446 and $0.2535 order block, after a 30% drop from the July 13 high of $0.3673. Notably, this order block has held as support for ADA multiple times and could be the inflection point for the much-awaited pullback.
Cognizant that demand zones are areas where buyers abound, increased buying pressure above the current level of $0.2546 could set the tone for Cardano price to reach for the psychological $0.3000, a level last seen on August 9. A move to reclaim the $0.3519 level would be likely in a highly bullish case, provided alignment from Bitcoin (BTC) price is present.
Notably, the histogram bars of the Awesome Oscillator are soaking in green, suggesting bullish presence that could bode well for Cardano price.
This is corroborated by the flattening Relative Strength Index (RSI) after a steep slope, evidence of corrective measures in play to avoid further downside.
ADA/USDT 1-day chart
Cardano on-chain metrics defy ADA price
Meanwhile, on-chain metrics are promising for ADA, with its social dominance recording a steady rise. This metric indicates the share of the asset’s mentions on crypto-related social media relative to a pool of more than 50 other most talked about projects online.
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ADA Santiment
Similarly, the MVRV ratio, showing Cardano’s market capitalization as a fraction of its realized capitalization ratio, is also positive, recording a steady rise since August 31. The steady climb means the market value of ADA supply is increasing relative to the realized value.
More broadly, the increasing values point to a larger degree of unrealized profit, thereby increasing the probability that investors will distribute the tokens to lock in gains. This would add to the liquid supply that has to be absorbed by demand pressure.
On the contrary, a declining trend in the MVRV ratio would signal a smaller degree of unrealized profit, interpreted as undervaluation, poor demand dynamics, or both.
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ADA MVRV
Nevertheless, with Bitcoin price still showing weakness and the broader market gloom, the uptrend for Cardano price would require a strong resolve among the bulls. Failure could see ADA slip through the demand zone, rendering it a bearish breaker before recording a new range low, potentially tagging the psychological $0.2200 level.
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
