- Most ADA trades ended in losses, prompting speculation that the price could fall again
- Price DAA was below 0.50, indicating that it could be time to buy the token
The loss of 5.42% of its value in the last seven days is something that Cardano has made possible [ADA] to emerge as one of the market’s worst performers in the top 20. While the token may not be new to this tag, some market participants believe that this could be a good time to buy the token.
To gain more insight into this, AMBCrypto considered an in-depth on-chain analysis. At the time of writing, ADA’s price was $0.45. The latest period of depreciation has affected profit and loss transactions on the Cardano network.
Cardano stops giving and keeps taking
According to Santiment, the ratio of the daily transaction volume in the chain in profit/loss was 0.827 at the time of writing. If this ratio is greater than 1, it means that there are more participants realizing gains than losses.
In this case, ADA’s trend would have been bullish. However, the above value indicated that only 0.827 trades ended in profit, compared to every on-chain trade that resulted in a loss.
Historically, this measure appears to correlate with price. For example, the ratio in February was 0.722. At the time, ADA’s price was $0.57. A few weeks later, the price jumped to $0.73 on the charts.
Source: Santiment
A similar scenario played out on April 13. At that point, the decline in the ratio caused ADA to jump from $0.43 to $0.52. Given past performance, there is a chance that Cardano will decline further.
If this is the case, the value of the cryptocurrency could fall to $0.42. However, there is a good chance that ADA will also deliver a 20% increase, which means an increase to $0.50 within a few days.
An entry level has appeared
Moreover, the price-DAA divergence is an indicator that can predict the valuation of ADA. DAA is an acronym for Daily Active Addresses and is used to measure the overall level of network activity.
Combined with price, the metric can identify potential exit and entry points. At the time of writing, the price DAA was -38.88%. From a trading perspective, a buy signal appears when the value is below 0.50.
On the other hand, a sell signal appears when the difference is 0.90 or higher. Since the ratio was 0.388, this seemed like a sign that it could be time to get into Dollar Cost Averaging (DCA) Cardano’s native token before the price rises.
Source: Santiment
However, it’s important to note that this metric alone cannot determine where Cardano goes.
Judging the same by volume, data from the chain showed that the metric rose on the charts. This is an indication of more buying and selling. However, a look at the price action would indicate that there have been more selling than accumulations.
Read Cardanos [ADA] Price forecast 2024-2025
As long as this remains the case, ADA may experience another decline, as mentioned above. However, if the decline becomes too intense, the token could return to its annual peak.