Cardano Down 50% In 4 Months: Sellers Unrelenting, Best Time To Buy ADA?

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As a long-term crypto investor with several years of experience, I have seen my fair share of market fluctuations and bearish trends. The recent performance of Cardano (ADA) has been particularly disheartening, as prices have plunged by nearly 60% since March.

As an analyst, I’ve observed that Cardano (ADA) has experienced significant downward pressure and selling over the past four months. A glance at the daily ADA/USD chart reveals a dominance of bears in the market. Following its peak in March, prices took a nosedive, dropping approximately 60% before finally finding some footing around mid-July.

After the setback in March, ADA has regained some ground but bears have remained unfaltering, particularly over the past week. To date, ADA has only managed to recoup half of its value following the price surge. This trend may be contributing to the bearish sentiment among traders on various perpetual trading exchanges such as Binance and OKX.

The decline in ADA prices since March and the emerging downtrend have led to a negative funding rate, which continues to climb higher.

Despite the widespread pessimism, Santiment analysts suggest that there’s a chance ADA prices may surprise us with a recovery. They explain that the current high levels of negative funding rates, which reflect increased selling pressure, might present an opportunity for bold traders to go against the trend.

Historically, when the selling of ADA has been particularly intense, Santiment analysts have noted that the asset’s price often rebounds strongly in subsequent sessions. This is due to a phenomenon called a “short squeeze,” which occurs when rapidly rising prices force sellers to buy back their short positions at higher prices, thereby amplifying the uptrend.

Despite this belief, it’s important to note that not every time an asset is seen as “extremely oversold” will prices bounce back as anticipated by analysts. Employing a contrarian approach in such situations should be done with care.

Traders might be doubtful that the asset can bounce back amidst heavy selling, so it’s advisable for them to remain cautious and adhere to the dominant trend—which is currently bearish.

Cardano Whales Staying Away Ahead Of The Chang Hard Fork

Based on the information from IntoTheBlock so far, the data indicates decreasing investor enthusiasm based on several indicators. Specifically, there has been a decline in the number of large transactions by investors, or whales, which could be a sign of reduced optimism. However, it’s important to consider other possible explanations such as portfolio rebalancing that might influence transaction volumes.

It’s yet to be determined how well ADA will fare in the upcoming days. The Cardano team is gearing up for the Chang hard fork, scheduled to wrap up by the end of July.

With this update, the Cardano smart contracts system will transition towards decentralization through the introduction of delegate representatives who are democratically elected and responsible for shaping the platform’s governance. The accomplishment of project Chang signifies the commencement of the last development stage for Cardano, Voltaire. Consequently, this decentralization process renders the network analogous to Ethereum in terms of its structure.

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2024-07-25 23:10