- Cardano’s trading volume drops sharply, signaling waning investor interest and potential short-term price weakness.
- Liquidity concentration around $0.94 raises the likelihood of ADA testing this level as support.
- Overbought conditions, confirmed by RSI and Bollinger Bands, indicate increased profit-taking pressure in the near term.
Cardano ADA has seen a slight decline, trading at $1.051, down 1.2% over the past 24 hours. This follows a significant rally in recent weeks, during which the price rose over 225% since November 5. However, according to the TradingView data, a sharp drop in trading volume is signaling reduced investor activity, potentially setting the stage for further price depreciation.
Trading volume surged during the rally, reaching $6 billion on November 16 and hitting a 2.5-year high of $6.2 billion on November 24. However, it has since declined to $3.7 billion, according to Santiment data. Analysts warn that if trading volume continues to decrease, it may signal a weakening demand for Cardano’s token, further pressuring its price.
Key Metrics Point to Potential Price Drop
Liquidity concentration around $0.94, as indicated by CoinGlass’ liquidation heatmap, suggests that ADA’s price may test this level as support. High liquidity areas often act as price magnets, increasing the likelihood of a downward move in the short term.
Meanwhile, technical indicators like Bollinger Bands and the Relative Strength Index (RSI) point to overbought conditions. ADA’s price recently touched the upper Bollinger Band, suggesting a potential sell-off as investors lock in profits. The RSI, currently at 84, confirms that ADA has been overbought since November 11, increasing the likelihood of a correction toward $0.95, the 23.6% Fibonacci retracement level.
Short-Term Challenges Amid Long-Term Optimism
While Cardano’s price faces immediate headwinds, analysts remain optimistic about its long-term prospects. Pseudonymous investor DW highlighted a V-shaped recovery on the hourly chart, setting a target price of $1.32 if trading volume resurges. Similarly, CryptoniteUae emphasized ADA’s strong bullish momentum in the longer term, advising caution in the short term while remaining positive about its recovery potential.
