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FxCryptoNews

03/21/2024

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Cardano (ADA) Holders React: Panic Selling Analysis

Cardano (ADA) holders reacted with panic selling on March 20th, triggered by a decline in the token’s price to $0.58. This move was reflected in Cardano’s Network Realized Profit/Loss, which spiked to 6.1...

Cardano (ADA) Holders React: Panic Selling Analysis

Cardano (ADA) holders reacted with panic selling on March 20th, triggered by a decline in the token’s price to $0.58. This move was reflected in Cardano’s Network Realized Profit/Loss, which spiked to 6.1 million, indicating a significant shift in on-chain transactions towards profit.

Source: Santiment

Initial Decline and Recovery

Despite the initial plunge, ADA’s price rebounded slightly to $0.61, marking a 1.25% increase within one hour of recovery. However, this was insufficient to offset the losses accumulated over the past week, amounting to a 19.73% decrease in ADA’s value.

Related article: Cardano’s Price Outlook: Bearish Patterns and Investor Strategies

The question arises whether panic selling ADA was a prudent decision. While some metrics suggested holders may have sold prematurely, others indicated it was a rational move in the short term.

Mean Dollar Invested Age (MDIA)

The MDIA, reflecting the average age of tokens weighted by purchase price, declined to 32.298. A decrease in MDIA implies investors are liquidating holdings, potentially leading to further price declines in the near future.

Related article: Cardano (ADA) Holders Facing Losses Amidst Price Decline

Contrary to MDIA, the MCA, which measures the age of tokens being moved, also decreased. A low MCA suggests accumulation by long-term holders, hinting at future bullish prospects despite short-term price volatility.

Source: Santiment

On the 4-hour ADA/USD chart, the Awesome Oscillator (AO) remained negative, indicating bearish momentum. However, the appearance of green histogram bars suggested a potential easing of this momentum.

Bollinger Bands (BB) and Chaikin Money Flow (CMF)

Analysis of Bollinger Bands (BB) revealed oversold conditions, with the lower band tapping ADA’s price at $0.58. Despite high volatility, the positive Chaikin Money Flow (CMF) suggested a possible price extension towards $0.70.

Source: TradingView

While panic selling may have provided some holders with minimal gains, the broader analysis suggests mixed signals regarding the optimal course of action. 

Short-term indicators point to potential further declines, while long-term metrics hint at bullish sentiment. Ultimately, the decision to sell or hold ADA hinges on individual risk tolerance and investment horizon.

Disclaimer: The information in this article should not be considered financial advice, and FXCryptoNews articles are intended only to provide educational and general information. Please consult with a financial advisor before making any investment decisions.

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