Cardano Price Faces Short-Term Bearish Pressure Amid Upgrades and Low Inflation
Cardano’s price has entered a consolidation phase following signs of weakness observed in Bitcoin’s chart. The asset has recently fallen out of a bearish setup, hinting at potential further declines. However, with the Chang upgrade on the horizon and 79% of nodes now running version 9.1.0, the situation remains dynamic. Notably, Cardano’s inflation rate stands at a mere 2.5% annually, outperforming many other blockchain networks. But will these developments be enough to counter the anticipated drop in ADA’s price?
Will Cardano’s Low Inflation Rate Offset the Price Drop?
Compared to other blockchain networks like Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), and Polkadot (DOT), Cardano exhibits a relatively low inflation rate of 2.5% per year. This low inflation signifies stable and gradual network growth.
On August 9th, Cardano rolled out the Hydra upgrade to enhance its scaling capabilities. Coupled with the imminent Chang hard fork, these upgrades might provide ADA with the momentum needed to surpass the $1 mark.
Cardano Price Analysis: Can Bulls Overcome Bearish Trends?
In the short term, Cardano’s price is showing bearish signals. It has recently broken down from a rising wedge pattern, a bearish reversal signal that suggests further downside potential. The price is currently trading below both the 50-day ($0.3457) and 200-day ($0.3788) exponential moving averages (EMAs), reinforcing the bearish trend. Key support and resistance levels for ADA are:
- Resistance 1: 50 EMA at $0.3457
- Resistance 2: 200 EMA at $0.3788
- Support: Around $0.28
The Relative Strength Index (RSI) is at 40.42, approaching oversold conditions, which may indicate that while bearish momentum persists, the asset could be nearing a level where buyers might re-enter.
The Chaikin Money Flow (CMF) stands at -0.14, signaling that more capital is flowing out of ADA than into it, aligning with the current bearish sentiment. A break below the $0.28 support level could lead to a deeper decline, potentially finding further support around $0.24.
On-Chain Metrics Signal Continued Bearish Trend
Recent on-chain metrics support the short-term bearish outlook for Cardano. The open interest across exchanges has decreased by 2.99% in the last 24 hours. Additionally, the aggregated cumulative volume delta, according to Coinalyze, is negative at 97.5 million, suggesting a trend where ADA Longs are being closed and Shorts may soon increase. This indicates that ADA’s price may continue to fall.
Further, Messari Research highlights that the transaction count on Cardano reached a one-year low on August 11, pointing to reduced network activity and a potential drop in investor confidence.
Nonetheless, there is a glimmer of hope as Cardano’s trading volume surged by 47% over the past 24 hours, despite a 4.7% price drop to approximately $0.336. This volume-price divergence could be a bullish signal, suggesting that ADA might experience a rebound following the current pullback.
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