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11/24/2023

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Cardano Stuck At $0.4 As Network Becomes Overvalued! Is ADA Price Waiting For A Correction?

In the past few hours, there has been a significant recovery in the price of Cardano’s ADA, influenced by increased options activity and rising trading interest. This recovery is largely attributed to a...

Cardano Stuck At $0.4 As Network Becomes Overvalued! Is ADA Price Waiting For A Correction?
Cardano (ADA) Price Could Remain in Consolidation Until July 2024, Claims Analyst

In the past few hours, there has been a significant recovery in the price of Cardano’s ADA, influenced by increased options activity and rising trading interest. This recovery is largely attributed to a strong interest among investors to purchase at lower prices, fueling the latest price correction. Nevertheless, as ADA’s value approaches a crucial monthly resistance level, an increase in selling pressure is noticeable. This trend is due to investors looking to capitalize on profits during short-term swings. 

Cardano’s Transaction Count Declines To 50K

Cardano has provided its investors with significant gains, achieving a 60% increase since October. However, it is now approaching a stage where it might lose these profits. A substantial portion of the return on investment has recently been lost as the ADA price struggles with validating a clear trend. 

Despite this, the activation of bullish traders near lower price points has led to a quick recovery, avoiding further drops. This action resulted in a remarkable short squeeze for ADA. According to data from Coinglass, ADA instigated short liquidations amounting to $800,000, thereby providing strength to its support levels.

Yet, increasing concerns of selling pressure rise as ADA reaches a peak on the price chart. Data from IntoTheBlock indicates that even with the recent uptick in price, Cardano’s transaction activity is on a downward trend. Presently, the transaction count has hit a one-month low, standing at 50.5K transactions. This trend implies that the market might be moving towards an overvalued state.

This data is further supported by the rising NVT ratio (Network Value to Transaction), which touched 3.16. Just like an inflated P/E ratio in the stock market can indicate overvalued stocks, a rising NVT ratio for Cardano may suggest that the altcoin is becoming overvalued.

This can put Cardano in trouble as sellers will increasingly open short positions to accelerate a downward correction.  

What’s Next For ADA Price?

After several unsuccessful attempts by the bulls to keep Cardano above the $0.4 breakout level, a correction began recently. However, bulls are strongly defending the support of $0.35. As of writing, ADA price trades at $0.39, surging over 3.7% from yesterday’s rate. 

The price is attempting to surge above immediate Fib channels and establish a trend above $0.4, which is set to be a new support zone. However, sellers are preparing for a decline below the EMA20 trend line. There’s a slight support at $0.34, but if breached, the price might drop to $0.28.

However, with buyers aggressively entering near dips, the above bearish forecast is not expected. The recent recoveries indicate strong buying interest from the bulls and raise the chances of surpassing the $0.4 mark as Bitcoin surges above $38K. Crossing this level could send the ADA price towards $0.46.

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Shayan is a digital nomad and a professional journalist. He delivers high-quality engaging articles to Coinpedia through his in-depth research and analysis.

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