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Cardano has seen a strong surge of 26% after the Federal Reserve announced interest rate cuts two weeks ago, which has increased optimism in the crypto market.
Analysts and investors are questioning the sustainability of the recent surge. Despite the initial rally, Cardano price failed to close above a key resistance level, signaling a potential weakness in the uptrend.
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On-chain data from Santiment shows that demand for ADA has declined, causing investors to become cautious. The decrease in network activity and buying pressure raises doubts about the sustainability of the current rally.
As the market awaits further developments, investors are keeping a close eye on signs of a reversal or continuation of the bullish trend, understanding that ADA’s next move will set the tone for its performance in the coming weeks. Could.
Cardano indicator shows related data
Cardano faces a significant risk of a 30% decline to its yearly low of around $0.27 On-chain data from Sentiment Reveals increasing selling pressure and declining demand.
Warning signals for ADA price have become apparent, with its Daily Active-Address (DAA) divergence showing a negative reading of -43.3% at the time of writing. This metric, which tracks the relationship between fluctuations in an asset’s price and the change in its daily active addresses, has remained negative since September 7, indicating a troubling trend for Cardano.
The negative ADA divergence suggests that much of ADA’s rally this month following the Federal Reserve’s interest rate cuts has been driven more by broader market sentiment than any specific demand for ADA. The lack of organic demand increases the chances of a rapid recovery soon.
Without sustained buying pressure, the price of Cardano could drop sharply as traders start taking profits, pushing the price downwards.
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If ADA fails to break its current resistance level of around $0.41, analysts expect a deep correction, which would potentially push the price back to the yearly low of $0.27. With weak demand and increasing selling pressure, the near-term outlook for Cardano looks uncertain, and traders are bracing for further downside risks.
ADA Price Action: Testing a Crucial Supply Level
ADA trades at $0.38, which is 10% below its daily 200 exponential moving average (EMA) of $0.41. This level has become an important resistance zone, as the price made new local highs around this area.
ADA needs to reclaim the $0.41 level and overcome the next major resistance at $0.45 to confirm the bullish trend for the coming weeks. Successfully crossing these levels would signal new strength, giving bulls control and potentially sending prices higher.
However, if ADA fails to move above these important levels, the altcoin could face further downside pressure. Failure to reclaim $0.41 and surpass $0.45 will result in an increase in selling, leading to a potential 30% decline. In such a scenario, ADA would be at risk of revisiting its yearly low of around $0.27.
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Given the current market uncertainty and declining demand, traders are keeping a careful eye on ADA’s price movements, as the next few days could be crucial in determining whether a bullish breakout or a deeper correction is on the horizon.
Image displayed from Dell-E, chart from TradingView
