In the first quarter of 2024, the price of Cardano (ADA) surged from $0.46 to $0.80 in less than 3 months. This performance suggested an upward trend towards $1. However, since then, this altcoin has been plummeting and shows little signs of repeating its previous success.
The overall market conditions contributed to Cardano's decline, but other factors also impacted its performance. This on-chain analysis highlights the key reasons why the ADA price is struggling to reach the levels it attained in 2022.
The $1.04 Supply Wall Poses a Challenge for Cardano
One of the major reasons for Cardano's price performance is the substantial supply wall starting at $1.04. According to the Global In/Out of Money (GIOM) metric, over 1 million addresses have accumulated more than 2 billion ADA at this level.
GIOM classifies addresses as being in profit, at the break-even point, or in loss. From a price perspective, the larger the clustering of addresses or trading volume at a specific price range, the stronger the support or resistance.
The image below shows that the addresses and trading volume around $0.35 are higher than the various price ranges up to $0.66. Therefore, Cardano's price has the potential to reach that point. However, the $1.04 supply wall can create significant resistance, making it difficult for ADA to surpass that level.
Read more: How to Stake Cardano (ADA)
Another factor contributing to the downward pressure on ADA is the state of the Mean Dollar Invested Age (MDIA). MDIA represents the average age of all dollars invested in a cryptocurrency.
In a bull market, a declining MDIA indicates that whales are reactivating dormant coins and recirculating them, often driving up prices.
However, in the case of ADA, the 90-day MDIA has been steadily increasing, suggesting that long-term holders are not moving their assets. This trend implies that investor activity is stagnant, making it difficult for the price to rise.
ADA Price Prediction: Risk of Reaching $0.32
On the daily chart, Cardano's price is at $0.37, but it is trading with a head and shoulders pattern. The head and shoulders pattern is a reversal pattern that typically accelerates the downtrend.
Moreover, ADA is currently facing significant resistance at the current levels, indicating that the token may struggle to trade at higher prices. If this situation persists, Cardano's price could drop to $0.32 in the short term.
Read more: 6 Best Cardano (ADA) Wallets to Consider in October 2024
However, if the overall market conditions improve, the long-term outlook for the token could be positive. Particularly, if Bitcoin (BTC) surpasses $70,000, the price of ADA could also rise. If BTC reaches a new all-time high, this altcoin could reach $0.61 and approach $1.
