Analyzing Cardano Price Outlook: On-Chain Metrics Point to Potential Breakout

Analyzing Cardano Price Outlook: On-Chain Metrics Point to Potential Breakout

Crypto News – Cardano’s price has been struggling to break through the $0.25 mark while other major cryptocurrencies like Bitcoin (BTC) and Solana (SOL) have experienced substantial weekly gains. To understand the potential triggers for a Cardano price breakout, we turn to on-chain analysis and examine key metrics.

Cardano reached its annual peak at $0.46 on April 15, 2023, following Ethereum’s successful Shanghai network upgrade. During the subsequent weeks, Cardano whales, which are wallets holding a minimum balance of 1 million ADA, took advantage of the price surge to cash in their profits. Between April 19 and May 20, these whales sold a significant 1.98 billion ADA coins. This massive sell-off triggered a 24% decline in price, dropping from $0.46 to $0.35.

More recently, Cardano whales have been accumulating ADA once again. In October, they acquired 120 million ADA, equivalent to roughly $30 million. This increased their total holdings to 21.36 billion ADA, the highest since the 2023 price peak. However, it’s important to note that when Cardano’s price reached $0.46 on April 15, the whales held a combined balance of 21.88 billion ADA, indicating a deficit of 520 million ADA coins needed to double Cardano’s price from the current $0.24 and reach a new annual peak.

Another significant metric to consider is the daily network participation rate. In Cardano’s previous price rallies, an increase in network participation played a crucial role. For instance, in 2023, Cardano crossed the $0.40 mark shortly after the daily active addresses reached a yearly peak of 135,400 on February 1. Subsequent price surges in April and July 2023 were also preceded by substantial spikes in network participation, pushing Cardano above 70,000 daily active addresses.

However, in recent weeks, Cardano’s network participation has been on the decline. Failing to reach the 40,000 mark, Cardano recorded only 28,538 active addresses on October 19. A decrease in daily active addresses suggests reduced user interaction with products built on the Cardano network and a decrease in the utilization of ADA in daily transactions, which aligns with the current price performance below industry trends.

In summary, historical on-chain data suggests that Cardano’s price has the potential to double if it consistently surpasses 70,000 daily active addresses, and if the whales continue to increase their holdings by an additional 520 million ADA coins.

Price Prediction: The Path to $0.50

From an on-chain perspective, a substantial increase in whale holdings and network participation rate could drive Cardano’s price higher. A closer look at the Global In/Out of Money data, which displays the entry price distribution of current ADA holders, reveals significant resistance around the $0.27 mark. A total of 417,830 wallets bought 6.4 billion ADA at an average price of $0.27. If these holders decide to take early profits, it could potentially trigger a premature price pullback. However, if the whales continue their buying trend, breaking through the $0.27 resistance level could push Cardano’s price closer to $0.50.

On the flip side, a bearish scenario could materialize if ADA’s price drops below $0.20. The chart indicates that 158,580 addresses purchased 1.49 billion ADA coins at the highest price of $0.24. In the event of such a decline, these holders might choose to “HODL” in hopes of a swift recovery. Nonetheless, if the crucial support at $0.20 does not hold, it could lead to a prolonged reversal in Cardano’s price toward the $0.20 mark.