ADA faces a drop in major trades
Cardano is a blockchain platform that facilitates transactions in its native ADA cryptocurrency and supports developers in creating secure and scalable applications. It is integrated with several payment systems, and a variety of projects have been built on Cardano.
ADA is used to facilitate transactions and participate in governance. Ownership of ADA determines who gets to be a slot leader and who earns a share of transaction fees paid for blocks. ADA tokens are also used for voting on software policies, including the inflation rate, giving participants an incentive to hold ADA and support its long-term value.
Despite being impacted by Bitcoin’s recent decline below the $65,000 mark, ADA’s downturn is also due to a significant drop in the number of large trades. The market sentiment, both macroeconomically and in terms of Cardano-specific activity, has shifted negatively.
Declining transaction activity
Recent on-chain data reveals that the daily volume of ADA transactions between $1 million and $10 million has dropped by 33% over the past month, while transactions exceeding $10 million have decreased by 24%. Understanding the reasons behind this decline in large trades is crucial for assessing ADA’s price outlook.
Large trades are vital to liquidity, and a decrease in such trades can reduce liquidity, making it harder for traders to buy or sell large quantities of ADA without impacting its price. With lower liquidity, ADA may become more susceptible to price fluctuations, and smaller trades could have a more significant effect on its price.
Additionally, a drop in large transactions might signal a loss of confidence among major holders or institutional investors, which could further decrease market sentiment and potentially cause more price declines.
A failed attack on the Cardano blockchain
On June 25, the Cardano network experienced a DDoS attack starting at block 10,487,530. The attack was unsuccessful, with no major damage done, and the network continued to operate as expected. The purpose of the attack was to manipulate the Cardano blockchain to charge lower fees for high-value transactions.
Despite the attack being thwarted, the Cardano network did face higher load than usual, causing some stake pool operators (SPOs) to encounter difficulties, especially with the block height competition. In response, developers have started working on a node upgrade to prevent future attacks of this nature.
Cardano founder Charles Hoskinson addressed the attack, updating the community via social media and sharing that Cardano had remained functional with only minor delays. The community has been actively involved in identifying the attack’s source, and a technical task force has been set up to devise solutions for future prevention. The updated node version, once tested and approved, will be made available for SPOs to upgrade.
ADA technical analysis
Since June 07, 2024, ADA has fallen from $0.49 to $0.35, and the current price stands at $0.39. ADA faces difficulty maintaining levels above $0.35, and a break below this threshold could see the price testing $0.30 in the coming days.
Key support & resistance levels for ADA
On the chart from January 2024, key support and resistance levels for ADA have been marked to help traders understand potential price movements. ADA remains under pressure, but if it manages to move above $0.45, the next resistance target would be $0.50. A strong support level is located at $0.35, and a break below this would signal a potential drop to $0.30. If the price falls below $0.30, the next key support could be around $0.25.
Positive factors for ADA price growth
Market sentiment plays a crucial role in ADA’s price movements, but positive news, partnerships, and developments within the Cardano ecosystem can attract more investors, leading to price increases. Analysts closely monitor the activities of large holders (crypto whales), as their buying behavior can influence market sentiment. A significant increase in whale transactions could drive ADA’s price up, as it would signal bullish behavior and encourage other investors to follow suit.
Signs of a downturn for ADA
ADA’s price is closely tied to Bitcoin’s performance, and when Bitcoin drops, it often impacts ADA and other cryptocurrencies. Regulatory concerns in the crypto market also present a potential risk for Cardano, as increased scrutiny could affect its growth.
The decrease in whale transactions has raised concerns about the confidence of large holders in ADA’s short-term prospects. If ADA’s price falls below $0.35, it could trigger further declines and bring the price closer to the next support level at $0.30.
Expert opinions on ADA
Since March 14, 2024, ADA has been in a downtrend, and analysts note that the lack of interest from investors in accumulating ADA suggests that the cryptocurrency may continue to experience lower prices. ADA remains a high-risk investment, with its price subject to volatile fluctuations, which could lead to substantial gains or losses.
It’s essential to conduct thorough research, understand the risks, and only invest what you can afford to lose when considering ADA. With potential market turbulence on the horizon and concerns over a prolonged period of high interest rates by the U.S. Federal Reserve, ADA and other cryptocurrencies could face additional challenges.
Disclaimer: Cryptocurrency is highly volatile and not suitable for everyone. Never invest money you cannot afford to lose. The information presented on this site is for educational purposes only and should not be construed as investment or financial advice.
