Cardano (ADA) has been facing a rapid decline in the number of active addresses recently, making it difficult for ADA to recover. Long-term investors (LTH) have a strong dominance over the market with a 41% MVRV Long/Short spread, while the decrease in short-term traders increases ADA’s resilience.
For now, it is critical to hold the $0.87 support. If it can regain the $1 level, the target could go up to $1.23. However, if the support is lost, there is a risk of the price falling to $0.77.
Cardano has been on a gradual decline since early December, with the price dropping below $1. This prolonged decline is increasing uncertainty among investors about the possibilities of ADA’s recovery.
Currently, Cardano’s chances of recovery depend on long-term investors (LTH) who have historically provided stability during difficult market conditions.
Cardano’s investor participation has been declining. Active addresses connected to the network are rapidly decreasing, making investors more skeptical about ADA’s chances of a recovery. The decrease in participation suggests that traders are exiting the market and the altcoin’s liquidity is decreasing. With decreasing liquidity, ADA is having a harder time recovering from its current levels. The lack of short-term trader participation reflects the market’s overall hesitancy, making it more difficult for prices to recover in the short term.
However, Cardano’s MVRV Long/Short Spread of 41% shows that long-term investors are more profitable than short-term traders, indicating the dominance of investors who prefer to hold ADA, avoiding short-term profit realizations.
Strong LTH participation typically helps stabilize asset prices and creates opportunities for recovery. If these investors hold onto their positions, it could prevent ADA from falling further and potentially support its recovery.
Cardano is currently trading at $0.89, just above the critical support level at $0.87. Maintaining this support is crucial for ADA to rally and reach $1.00. This level poses a significant hurdle, both psychologically and technically.
If it can make the $1.00 level support again, ADA’s price could gain a stronger position and start a move towards the $1.23 level. However, if the $0.87 support is lost, ADA’s price could drop to $0.77 levels, further negatively affecting investor confidence. Staying above this support is critical for Cardano to avoid a prolonged downtrend.