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Cardano’s 20-Day EMA – The 10% drop could be a sign of…

2min Read

More than 60% of all ADA investors currently hold it at a loss. 

Cardano's 20-Day EMA - The 10% drop could be a sign of...

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  • ADA’s buying pressure waned as the coin’s price fell under the 20-day EMA
  • Its Futures Open Interest has declined since the beginning of June too

Cardano [ADA] fell below its 20-day exponential moving average (EMA) on 7 June, and its value has since declined by almost 10%. At the time of writing, the altcoin was valued at $0.41, according to CoinMarketCap

ADA’s 20-day EMA represents its average price over the past 20 days. When its price falls below this level, the coin trades at a level lower than its average price over the last 20 days.

ADA 1-Day Chart

Source: TradingView

It is a bearish signal that hints at a decline in buying pressure and a rally in coin sell-offs. The spike in ADA sell-offs over the past week can be partly attributable to how profitable sales transactions involving the altcoin have been during that period. 

AMBCrypto assessed ADA’s daily ratio of transaction volume in profit to loss (using a seven-day moving average), and it returned a value of 1.01 at press time. 

This metric tracks the ratio of an asset’s daily transactions that return a profit to those that end in a loss. At the time of writing, for every ADA transaction that ended in a loss over the past week, 1.01 transactions brought about profit, Santiment revealed.

However, a significant number of ADA investors continue to sit on unrealized losses. According to IntoTheBlock, for instance, 3.04 million addresses that make up 68.06% of the investor class are currently “out of the money.” This means that this cohort of ADA investors currently hold the coin at a price lower than their cost basis.

Conversely, 1.36 million wallet addresses, which comprise 30.38% of all ADA holders, seem to be in profit. 

Cardano Global In/Out of the Money

Source: IntoTheBlock

ADA Futures open interest falls

Due to its price fall, ADA’s Futures open interest has declined steadily over the past two weeks too, according to Coinglass.

This metric tracks the total number of outstanding Futures contracts or positions that have not been closed or settled. When it falls, it suggests an uptick in the number of traders exiting the market without opening new positions.

Is your portfolio green? Check out the ADA Profit Calculator

It is often regarded as a bearish signal, one that hints at a surge in negative bias towards an asset. At press time, ADA’s Futures open interest had a figure of $237.14 million.

More importantly though, its value has depreciated by 12% since the beginning of the month.

Cardano Open Interest

Source: Coinglass


Abiodun is a freelancer writer working with AMBCrypto. He is also a lawyer with over 2 years of experience. With a keen interest in blockchain technology and its limitless possibilities, Abiodun spends his time understanding the technology, building projects, and educating people about it.
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