ADA Close To Confirming Bearish Pattern Despite Cardano’s Efforts

NOIDA (CoinChapter.com)— ADA price is on the brink of confirming a bearish technical pattern that could devour the Cardano token’s gains since Nov. 2023.

April has not been a good month for the Cardano token, with the ADA price dropping below $0.45 following the recent crypto market crash. Moreover, Forbes Research released a report in late March 2024 labeling Cardano a “billion-dollar zombie” project.

Per the report, Forbes categorized layer-1 blockchains with high valuations but “unproven and having little utility other than speculative crypto trading” as zombie projects. Moreover, the report noted that Cardano seemed to rely too much on the popularity of its creator, Charles Hoskinson.

Hoskinson himself seems to be the main attraction. He owns an 11,000-acre ranch in Wyoming, funds self-described alien hunters and recently opened an anti-aging and regenerative medicine center in the town of Gillette.

The report stated

ADA Close To Breaking Below Bearish Pattern

ADA price has formed a bearish technical setup called the ‘bear flag pattern.‘

The bear flag pattern appears on a cryptocurrency price chart when a brief, sharp countertrend movement—often referred to as the flag—follows a preceding downward trend. The formation typically signals a potential reversal of the countertrend.

In a bearish continuation setup, volume levels may stabilize or decrease during consolidation. During the consolidation period of a bear flag setup, the market often trends upward in response to the initial price drop, triggering FUD.

Furthermore, the emotional response typically results in higher-than-average trading volumes as investors and traders re-enter the market to capitalize on or mitigate the price movement’s effects.

Traders calculate the bear flag pattern’s price target by subtracting the flagpole’s length from the breakout price level. As a result, ADA price might drop to $0.32, a 32% drop from the current price level.

ADA price is testing the pattern’s support line, and further bearish pressure could force the token to confirm the bearish setup. However, the Cardano token has lined up some bullish cues that could help it start a bull run.

On-Chain Data Could Help ADA Price Invalidate Pattern

IntoTheBlock’s Global In/Out of the Money (GIOM) indicator categorizes wallet addresses based on their profitability status at the current ADA price, classifying them into three groups: in the money (profiting), at the money (breaking even), and out of the money (losses).

36.28% of ADA holders are currently profiting, while nearly 59% are currently ‘out of the money’ or facing losses. This situation typically deters holders from selling, thereby reducing the likelihood of a price drop due to a mass sell-off.

For the undecided investors, this presents a strategic opportunity to buy into ADA at a lower price, anticipating a market recovery.

The analysis of large transactions on the Cardano blockchain further reinforces the bullish outlook. A notable surge in transactions over $100,000, recorded at 6,180 with a 15% increase on April 24, suggests active accumulation by ADA whales as the token’s price dipped below $0.47

The combination typically indicates strong buying interest during price dips, a common strategy among seasoned investors aiming to maximize returns.