Cardano ($ADA ) has experienced an 18% price decline over the past week, in line with broader market trends following a period of steady price growth. Beyond the drop in value, network activity on the Cardano blockchain has also slowed, raising concerns about the altcoin's short-term prospects. According to on-chain data, these concerns appear to be justified.

Cardano Encounters Key Roadblock

On December 8, Cardano reached a yearly high of $1.22, but its value has since fallen to $0.88, largely due to significant sell-offs. While some ADA holders may expect a short-term rebound, the In/Out of Money Around Price (IOMAP) indicator suggests that such a recovery could face substantial resistance.

The IOMAP highlights key price levels where Cardano holders are in either profit or loss. The indicator shows a significant concentration of addresses around the $0.92 price level, where 58,470 addresses hold a combined 951.02 million ADA. This volume is higher than the accumulation seen between $0.74 and $0.88, indicating that $0.92 represents a strong resistance level.

If buying pressure remains low, ADA may struggle to break above its current price. In such a scenario, further price declines are likely, leading to a prolonged period of correction.

Decline in Network Activity

Supporting this bearish outlook, data from Santiment reveals a notable drop in Cardano's network activity. On December 16, there were over 51,000 active addresses on the network, but by the time of writing, this number had decreased to 32,700. Active addresses, which reflect wallets involved in transactions, are a critical measure of blockchain engagement and user activity.

A decrease in active addresses typically signals weakening network engagement, which is often a bearish indicator for price action. The decline in this metric further suggests that ADA may continue to face downward pressure.

ADA Price Prediction: Continued Decline Likely

From a technical standpoint, Cardano’s price appears poised for further declines. The Exponential Moving Average (EMA) indicators suggest a bearish trend. ADA's price has fallen below the 20-day EMA (blue), signaling weak short-term momentum. Moreover, the price is hovering near the 50-day EMA (yellow), a critical support level. If this support fails to hold, ADA could see further declines to $0.77. In a more severe bearish scenario, the price could fall as low as $0.55.

However, if network activity picks up and investor sentiment improves, the outlook for ADA could change. In such a case, Cardano's price may rebound, with potential upside to $1.33.

Conclusion

In summary, Cardano is currently facing significant challenges, with declining network activity and a bearish technical outlook suggesting the possibility of extended price corrections. For ADA holders, the near-term outlook remains uncertain, with key support levels being tested. However, any uptick in network engagement could shift the trend in favor of a potential price recovery.

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