Recently, Cardano (ADA) attempted to reach $0.80 but failed, and its price retreated to $0.75. This decline has raised concerns about its short-term prospects.
These concerns may be valid, especially since this on-chain analysis suggests that ADA could fall to lower values than recently observed.
Liquidity concentration decreases
According to Coinglass, the liquidation heatmap is a key indicator that suggests that ADA’s price could decline. To put this into context, the heatmap identifies price levels where large-scale liquidations could occur.
Furthermore, the one-week liquidation heatmap for Cardano reveals that the concentration has shifted to $0.69. Based on this observation, the price could potentially drop from $0.75 to $0.69 in the near term, in line with the prevailing market conditions.
Cardano Liquidation Heatmap. Source: Coinglass
Another indicator supporting the potential decline is the drop in trading volume. On November 16, Cardano’s trading volume was nearly $6 billion. However, according to on-chain data from Santiment, it has dropped significantly to $1.78 billion.
Trading volume measures investor interest by calculating the total value of tokens exchanged over a specific period. Rising volume indicates increased interest and activity, often driving the price up. Conversely, a drop in volume suggests decreasing interest. If reversed, this could have prevented another drop in Cardano’s price.
Therefore, the drop in volume, combined with its recent price drop, signals reduced demand and increases the likelihood of further devaluation in the near term.
Volume from Cardano. Source: Santiment
ADA Price Prediction: Could $0.63 Be the Next Support?
On the daily chart, the Bollinger Bands (BB) have expanded. The BB is a technical indicator that measures the volatility surrounding a cryptocurrency. Depending on the buying or selling pressure in the market, an expanded BB can cause a rapid drop or rise in price.
Additionally, the indicator also shows whether an asset is overbought or oversold. When the upper band of the BB touches the price of an asset, it is overbought. On the other hand, if the lower band touches the value, it means that the token is oversold.
In this case, Cardano price has reached the upper band suggesting that a drop below $0.68 may occur soon. If selling pressure increases, ADA could drop to $0.63.
Cardano Daily Analysis. Source: TradingView
However, if Cardano’s volume increases with a resumption of buying pressure, this prediction would be invalidated. This could also happen if investors decide to HODL rather than liquidate their assets. In this scenario, the value could jump to $0.82.
The article Cardano Retreats to $0.75, Faces Risk of Further Declines, Analysts Warn appeared first on BeInCrypto Brasil.
