Cardano (ADA) Faces Potential Price Decline Despite Low Inflation Rate and Network Upgrade

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As an analyst who has weathered numerous market cycles and witnessed the rise and fall of various cryptocurrencies, I must say that the current state of Cardano (ADA) is intriguing yet challenging. While its low inflation rate and upcoming network upgrades are undeniably appealing, the broader market weakness seems to be taking a toll on ADA’s price action.

At the moment, Cardano (ADA) is going through a tough period as its value seems to be stabilizing and indicators suggest a possible drop in price.

As a researcher, I’m observing that despite the cryptocurrency boasting a relatively low inflation rate and imminent network improvements, it’s facing challenges in sustaining an uptrend due to the general weakness prevailing across the broader market.

Market Weakness and Cardano (ADA) Price Action

The price trend for Cardano (ADA) has shifted negatively, breaking out from an ascending triangle pattern which often indicates a bearish reversal. This selloff has driven ADA below crucial support points and essential moving averages (EMAs). At the moment, the 50-day EMA stands at approximately $0.3457, and the 200-day EMA is around $0.3788, serving as resistance levels in the current market conditions.

Currently, ADA‘s support stands at approximately $0.28. If it continues to fall, it may challenge the $0.24 price point. The Relative Strength Index (RSI), currently at 40.42, suggests that the asset is approaching oversold territory, meaning it might be over-sold and due for a potential rebound. On the other hand, the Chaikin Money Flow (CMF) reading of -0.14 indicates that there’s more selling activity than buying interest at the moment.

Impact of Low Inflation and Network Upgrades

Compared to other popular blockchains like Solana, Avalanche, and Cosmos, Cardano’s annual inflation rate of 2.5% stands out as an advantage. This modest rate helps maintain Cardano’s financial stability and positions it as a more appealing choice for potential investors.

Speaking about major improvements to the network, Cardano carried out the Hydra upgrade on August 9 with the aim of boosting scalability. Additionally, the upcoming Chang hard fork is expected to offer additional enhancements to the network’s functionality, possibly helping ADA to cross the $1 mark. Nevertheless, despite these advancements, the price has not yet demonstrated a substantial positive response.

On-Chain Metrics and Market Sentiment

According to data tracked on Coinalyze, there’s been a decrease in open interest for Cardano across various exchanges by approximately 2.99% within the last 24 hours. This negative change in total volume (-97.5M) suggests that traders are closing their long positions, while it’s possible that new short positions could be emerging.

As a seasoned cryptocurrency investor with years of experience under my belt, I have witnessed numerous market fluctuations and trends. The latest development in Cardano’s network activity has caught my attention. According to Messari, Cardano’s transaction volume hit a one-year low on August 11, which is concerning as it reflects reduced network activity and waning investor confidence. However, I find it intriguing that despite the decline in price by 5.4%, ADA‘s trading volume increased by 47% over the last 24 hours.

Analyst Says Cardano (ADA) Could 10x in the Future

Even though the market is showing a downward trend at present, certain experts remain optimistic about Cardano’s future prospects. In a recent post on platform X, analyst Max Maher posits that Cardano might see a growth of up to 10 times, fueled by favorable public opinion and rising network activity.

Maher admits that ADA hasn’t performed as well this year compared to peers such as Ethereum and Solana. Yet, he remains optimistic that once the essential foundations are established, Cardano may surpass the market and take the lead during the next bull run. This projection suggests a substantial growth opportunity for Cardano, despite its current hurdles.

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2024-08-12 13:45