Cardano (ADA) price is struggling to break above the critical $0.40 resistance despite rising network activity. Last week, Cardano long-term investors inadvertently triggered another ADA price correction as they booked profits. Will the bulls overturn the bearish momentum this week?
On May 31, Cardano’s transactional activity reached 105,000 daily transactions for the first time since December 2022. But remarkably, it has not translated into significant price gains for ADA.
On-chain data reveals that bearish trading activity from long-term investors could be slowing down any bullish momentum. What are the chances that the bulls will regain control of the market in the coming weeks?
Cardano Long-term Holders Are Bailing
Long-term holders on the Cardano network appear to have booked some profits as the ADA price approached $0.40 last week. The Santiment chart below shows how ADA Age Consumed has spiked considerably since May 26.
Age Consumed evaluates the trading activity of long-term investors by tracking the number of recently sold coins multiplied by the number of days since they were last moved.
The chart below shows that ADA Age Consumed currently sits at 25.6 billion, a 9,500% spike from 261 million recorded on May 26.
When the metric spikes considerably, as seen above, it signals that long-term holders are selling off large amounts of coins.
When long-term investors begin to book profits, it could potentially spook other strategic investors to become hawkish about the project’s future prospects.
Investors Will Likely Continue to Sell
In confirmation of the bearish outlook, it appears that Cardano traders could continue to sell until the price drops by another 2%.
The Market Value to Realized Value ratio depicts that most crypto investors that bought ADA over the past month are holding unrealized losses of around 3%.
Historical trade patterns suggest that ADA holders may be willing to take up to 5% losses before they start selling.
The MVRV ratio evaluates the financial position of current token holders to estimate the percentage of their unrealized losses or profits.
Going by the chart above, Cardano’s price will likely drop slightly further before the bulls begin to regroup for another rally.
In summary, the bearish trading activity among Cardano long-term investors and the relatively low levels of unrealized losses could see ADA price drop in the coming days.
ADA Price Prediction: A Reverse to $0.34 is Likely
The profit-taking frenzy among long-term investors suggests that ADA’s price will likely drop toward $0.34. But, according to IntoTheBlock’s In/Out of the Money Price (IOMAP) distribution data, the ADA price will likely experience bullish support around $0.36.
At the zone, there’s a buy-wall mounted by 193,580 addresses that bought 2.12 billion ADA coins at an average price of $0.36.
But if that support caves as expected, then ADA price will likely slump further toward $0.34.
Still, the bulls can negate this pessimistic narrative if ADA price breaks above $0.40. But as seen above, some of the 182,000 investors that purchased 3.2 billion coins at the maximum price of $0.39 could resist.
But if that resistance level fails to hold, the ADA bulls can push the rally as far as $0.43.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.
Source: https://beincrypto.com/ada-price-dips-040-tx-vol-spikes/