Will Cardano whales prevent a 20% drop in ADA price?
Will Cardano whales prevent a 20% drop in ADA price?
The Blockchain Industry: ADA Price Analysis and Fundamental Insights
Introduction
The blockchain industry continues to evolve, with various cryptocurrencies gaining attention and going through different market cycles. In this article, we will analyze the recent price movements of Cardano (ADA) and explore the underlying fundamentals that could impact its future performance.
ADA Price Risks Falling to June Lows
Cardano’s price is currently at a critical juncture, with the potential for a significant decline. The market pattern known as the Bump-and-Run-Reversal (BARR) suggests that ADA could experience a downside move of over 20% in August or early September.
The BARR pattern consists of three stages: Lead-in, Bump, and Run. During the Lead-in stage, the price gradually rises without excessive speculation. However, in the Bump stage, there is a sharp increase in prices, followed by a sudden drop, creating a “bull trap” scenario. The recent price chart of ADA reflects the Bump stage, indicating that the Run phase may have begun.
If the BARR pattern holds true for ADA, the downside target can be determined by subtracting the breakdown point at the support line from the pattern’s maximum height. This calculation reveals a potential price target of around $0.22, representing a 20% drop from the current levels.
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On the other hand, a rebound in ADA could lead to a price increase towards the 50-day exponential moving average (50-day EMA) at approximately $0.30, translating to a 5% upside from the current prices. Moreover, if ADA manages to flip the support line into resistance, it could further surge towards the 200-day EMA at approximately $0.34, indicating a 30% increase from the current levels.
Whales and Sharks Buy ADA Price Dips
Despite the bearish forecast for ADA’s price, there are promising fundamentals that could counterbalance the downward pressure. On-chain metrics reveal the accumulation of ADA by whale and shark wallets, which hold between 100,000 and 1 million ADA. These large stakeholders have acquired $116.1 million worth of Cardano since May 2023, reaching their highest holdings since September 2022.
This period of ADA accumulation coincided with a 25% price decline driven by regulatory concerns in the United States. The fact that ADA whales and sharks have been actively buying the price dip indicates their confidence in the potential future gains.
Cardano TVL and Dapp Transactions Grow
In addition to the accumulation by large stakeholders, Cardano’s network metrics have shown positive growth in the second quarter. The Total Value Locked (TVL) on the Cardano network increased by 9.7% quarter-on-quarter (QoQ), demonstrating greater adoption and usage. Furthermore, the average daily decentralized application (dapp) transactions surged by 49% QoQ.
Stablecoins played a significant role in driving the growth of TVL and dapp transactions, with a remarkable increase of 34.9% QoQ. This growth in network activity further strengthens the upward pressure for ADA, as it serves both as a fee settlement and staking token in the Cardano ecosystem.
Conclusion
The blockchain industry, represented by cryptocurrencies like Cardano, is subject to the dynamics of price cycles. Currently, ADA faces the risk of a significant decline based on the Bump-and-Run-Reversal (BARR) pattern. However, this potential downside is offset by the accumulation of ADA by large stakeholders and the growth in Cardano’s network metrics.
While the price of ADA may experience short-term volatility, it is essential to consider the underlying fundamentals and the long-term prospects of the Cardano ecosystem. As the industry continues to mature, innovative blockchain technologies like Cardano are poised to play a crucial role in shaping the future of finance, decentralized applications, and various other sectors.
