Retail investors are losing interest in Cardano price after Shelley launched on the project’s mainnet
Even though Cardano price has risen more than 20% over the past few days, the on-chain figures remain pessimistic about the short-term price for ADA. Cardano’s recent price action suggests that Shelley’s July 29 launch was seen as overkill.
Investors are still selling off Cardano price after the Shelley upgrade
After Cardano founder Charles Hoskinson revealed that the protocol was finally transitioning to a proof-of-stake consensus algorithm, ADA gained 182%, hitting a yearly high before launch. Following the hardfork, the hype died down, and ADA took a 34% nosedive to a low of $0.102.
Since then, Cardano recovered some of these losses, gaining 22% and settling at $0.124. However, different on-chain metrics show that bulls will face difficulty moving prices any further.
IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model estimates that $0.114 plays a key role in Cardano’s trend. Transaction history shows that this is the largest supply barrier underneath the so-called “Ethereum killer” that could hold falling prices at bay. Here, over 12,000 addresses had previously purchased more than 2 billion ADA. This area could absorb some of the selling pressure from a fall, preventing Cardano from falling further.
That said, if this support level breaks, then it could be catastrophic for those betting to the upside. The IOMAP cohorts show that the next significant supply level reinforcing ADA’s uptrend sits around $0.085. If both were to break, ADA holders should expect their investments to plunge by another 30%.
In/Out of the Money Around Price | Source: IntoTheBlock
Despite the grim worst-case scenario, the cryptocurrency market’s unpredictability means the bullish outlook cannot be taken out of the question. The IOMAP cohorts model shows that Cardano also faces stiff resistance ahead if there is a significant upward movement. Roughly 8,000 addresses hold 2.9 billion ADA between $0.131 and $0.134, meaning that it will take an enormous amount of buying pressure to send prices higher. Given these numbers, the odds currently favor a pessimistic short-term outlook on ADA.
When looking at Cardano’s network growth, the bearish thesis holds. Since late July, the number of new daily ADA addresses has steadily declined. Roughly 25,000 addresses were joining the network daily around July 30. This number has dropped to 7,000 a day, representing more than a 70% drop.
Cardano’s New Daily Addresses | Source: IntoTheBlock
The downward trend in network growth is a red flag for price growth shortly. Usually, a sustained decline in network growth is a leading indicator of deteriorating prices. The lack of newly-created addresses tends to affect the regular inflow and outflow of tokens in the network, and hence liquidity, so traders beware.
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