Cardano (ADA) has been experiencing a gradual decline since early December, pushing its price below $1. This prolonged decline has left investors uncertain about ADA’s recovery prospects.
Altcoin hopes now rest on long-term holders (LTHs), who have historically provided stability in challenging market conditions.
Cardano Investor Participation Is Declining
Active addresses on the Cardano network are falling sharply, reflecting growing skepticism among investors regarding ADA’s recovery. This drop in share is a worrying sign as reduced activity indicates that many traders are moving away from the market, leaving the altcoin with diminished liquidity.
With liquidity declining, ADA faces greater difficulty in recovering from current levels. The lack of active engagement from short-term traders highlights the hesitation of the market in general, making recovery to critical price points more challenging in the short term.
Cardano Active Addresses. Source: Santiment
Cardano’s macro momentum offers a glimmer of hope, supported by MVRV, which currently stands at 41%. This high positive value suggests that LTHs are significantly more profitable than short-term holders (STHs), showing the dominance of investors willing to HODL rather than seek short-term profits.
The presence of a strong LTH holding typically stabilizes an asset’s price and provides room for recovery. If these investors hold onto their positions, they could offset the cautious sentiment in the broader market, preventing ADA’s price from falling further and potentially aiding its recovery.
Cardano MVRV Long/Short Ratio. Source: Santiment
Price prediction
Cardano is currently trading at $0.89, holding just above the crucial support level of $0.87. Holding this support is essential for ADA to regain upward momentum and target the $1 mark, an important psychological and technical barrier.
Flipping $1 into support is critical to starting the recovery. If ADA reaches this milestone, it could begin to reverse recent losses, with a target of $1.23 to regain a stronger foothold in the market. This level would mark a significant step towards restoring investor confidence.
Cardano Price Analysis. Source: TradingView
However, losing the $0.87 support could have serious consequences for the price trajectory. A drop to $0.77 or below would invalidate the bullish outlook, extending losses and deepening investor skepticism. Holding above this support is vital to avoid a prolonged downtrend.
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