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Cardano’s rising volume may be ADA’s greatest undoing – How?

3min Read

If more capital flows into Cardano’s market, then ADA may recover. If not, a worse harder plunge can occur.

Cardano’s rising volume may be ADA’s greatest undoing - How?

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  • The rising volume on ADA could further push down its price.
  • Open Interest fell, suggesting that ADA could drop as low as $0.40.

Cardano’s [ADA] fall to $0.45 has been accompanied by a surge in its volume, AMBCrypto discovered. Between the 22nd and the 23rd of January, Cardano’s volume soared from 234 million to 453 million.

This means that there have been a lot of transactions involving the token.

But an increase in volume is not always good news for the price of a cryptocurrency. When the price increases and the trading volume follows, the trend could signal a strong interest in buyers.

This could also serve as a strength for an upward price action.

However, rising volume on falling price does the opposite. In ADA’s case, if the volume continues to increase alongside a price decrease, the trend could lead to a further drawdown.

Cardano trading volume and ADA price action

Source: Santiment

It is the bears’ season to shine

Per the technical outlook, the 20-day EMA (yellow) had risen above the 9-day EMA (blue). This trend is considered bearish.

Also, ADA’s price had fallen below both EMAs, suggesting that a short-term recovery might not be an option.

The Chaikin Money Flow (CMF) also showed a similar indication as it dropped to -0.07.

This negative reading suggests that selling pressure was intense, and if bulls do not curtail the momentum soon, ADA might drop to $0.40.

Concerning the Aroon indicator, the 4-hour chart showed that the Aroon Up (orange) was 14.29%. On the other hand, the Aroon Down (blue) was 100%.

This disparity was a testament to the bearish momentum the Cardano native token was facing.

For the Relative Strength Index (RSI), it had dropped to 24.16, suggesting that ADA was overbought. While the price could continue declining, the RSI reading showed that a rebound could be close. But it depends.

Cardano price analysis

Source: TradingView

If more capital flows into the Cardano market, then ADA could have a chance at recovery. However, a lack of liquidity could send it in the opposite direction.

So, traders might need to watch out for the dynamics that in the coming days.

No way out of the dump yet

In terms of the Open Interest (OI), Coinglass showed that it fell to $231.61 million. OI is the number of outstanding futures contracts related to a cryptocurrency.

When it increases, it means market participants are increasing net positioning.

However, a decrease in the OI suggests dwindling liquidity and increased closure of positions. In connection to the price action, the OI indicates that ADA could continue to dump.

This was because speculation around the token decreased.

ADA futures open interest

Source: Coinglass

Is your portfolio green? Check out the ADA Profit Calculator

If the status does not change, there is a high chance that ADA falls below $0.45 which happens to be a key support. At the same time, traders should be watching out for a potential reversal after the possible decline.

Should ADA fall below $0.40, then it could be a good entry before the next uptrend.


Victor Olanrewaju is a full-time journalist at AMBCrypto. Settled in Lagos, his fascination with blockchain technology and the cryptocurrency market arose out of his love of freedom and everything free. As a Nigerian, Victor understands the impact unfounded financial restrictions have on a population. He sees Bitcoin and cryptos as a way to circumvent these obstacles, as a tool for value creation despite all the setbacks. A graduate in Physics, Victor previously worked as a Senior Marketer at Melange Technologies. Before that, he dealt with crypto-marketers on a regular basis in his capacity as Copywriter at Ventrix Media. At AMBCrypto, Victor’s focus is on assessing the real effectiveness of both on-chain and off-chain developments on a project and its community sentiment.
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