If you are thinking about buying Cardano, it might be wise to wait for a sign of a price reversal. If the price stays about $0.40 or $0.5 for a while. This would suggest that the downward trend has ended and a new upward trend might have started.
Cardano reached a new low in 2024, falling to $0.27, which is lower than its previous low of $0.31 in June. However, it bounced back a little, but it’s not good news for the cryptocurrency market, as Cardano is one of the major cryptocurrencies. Let’s understand why this happened and whether you should consider buying Ada now or not.
Introduction of Cardano (ADA)
Cardano is a third-generation blockchain platform that started in September 2017. Charles Hoskinson, who is a co-founder of Ethereum, developed it. Cardano was developed to fix problems found in earlier blockchains, especially in how they scale, work, and sustain their value and environment.
It uses a special method called Ouroboros to confirm transactions. This method is called “proof of stake” (PoS) and uses less energy than the proof of work (PoW) system used by Bitcoin and Ethereum.
Factors Behind the Price Fall
Cardano’s recent price drop of $0.30 happened because of different factors. Understand them before making any decisions.
Market Trend: Generally, the market behaves as a major cryptocurrency like Bitcoin and Ethereum fluctuate. These cryptocurrencies often set the direction for the market according to their trend, and the cryptocurrency market is going through ups and downs with many other coins, including Cardano, falling.
Loss of Trust among Investors: A big reason for Cardano’s price drop is that large investors have lost their confidence. Reports claimed that big transactions for Cardona dropped a lot, from $23 billion to $17.4 billion in just one week in March 2024. Because of this sudden downfall, Cardano lost its trust, and small investors sold out their them in panic.
Falling of the Cardano Community: Recent data shows that the number of Cardano members has been decreasing. For example, the number of unique developers working on Cardano’s Github project has fallen by 16.5%, showing less activity in its development. Even the total value of its network went down a lot, which reflects the falling confidence of investors.
Technical Analysis: From a technical point of view, Cordano has been following a downward trend since reaching a 2-year high of $0.81 in mid-March 2024. The price has faced a resistance level that is hard to break, leading traders to make a profit from their trades. This RSI showed an overbought condition, which means the price is likely to pull back, which has happened now.
Market Sentiment: The overall fall in the cryptocurrency market has many investors waiting to see what will happen next. Because of uncertainty around regulations and market behaviour, investors don’t want to buy more, which further pushes the market downward.
Whether You Should Buy Cardano (ADA) or Stay Away
Liquidity of Cardano: The liquidity of ADA tokens is around $0.378 and $0.432. If Cardano can stay near these prices, it might attract more buyers, causing the price to increase by around $0.432 or even $0.5 in the next few weeks. If the price closes around $0.5, it could be a great sign of a possible long-term increase in its value.
Market Sentiments: Cardano’s price has been in a downward trend, especially after dropping below important support levels like $0.40. Recently, the price has struggled to keep going up, with sellers (bears) in control. However, some experts believe a possible turnaround might happen soon, and may start trading activity.
Dependency on Big Investors: Recent data shows that big investors, called “whales”, bought more ADA during its price drop. This buying can be a positive sign that the price might go up in the future. If its demand increases, it could push the price higher when market sentiments improve.
Conclusion:
While investing in these conditions, it is important to use risk management strategies. Due to market volatility, it’s recommended to set stop losses and diversify your portfolio to reduce losses.
If you are thinking about buying Cardano, it might be wise to wait for a sign of a price reversal. If the price stays about $0.40 or $0.5 for a while. This would suggest that the downward trend has ended and a new upward trend might have started.
