Cardano price recovery likely to be hampered by slow network activity

Cardano price action shows little relief for holders despite the recent short-term bullish rally, which has pushed the price of ADA up by almost 4%.

Cardano (ADA) price action has been dramatic since reaching its all-time high. Even though ADA managed to maintain its position among the top 10 ranked cryptos by market cap, its price action has left ADA holders wanting more.

Cardano price recently touched the $0.31 level, which equates to a 85% loss from its all-time high of $3.10 in August 2021. ADA price is trading in a major bearish trend line after making an all-time high.

What could lie ahead for the eighth-ranked cryptocurrency by market cap after the price of Cardano returns to January 2021 levels?

Ada Whale and Shark Offloading

A look at the Cardano address balance indicated that sharks and whales were unloading their coins. Since May 2022, these groups have sold 600 million ADA and are actively trading price movements in both directions.

Address balance between 100k-10M ADA |  Source: SanBase
Address balance between 100k-10M ADA | Source: SanBase

The Network Realized Profit/Loss indicator divided by the actual value shows signs of surrender similar to the March 2020 COVID-19 crash. Since large losses are realized on-chain, price recovery can take an extraordinarily long time.

Network Gained Profit/Loss |  Source: SanBase
Network Gained Profit/Loss | Source: SanBase

Notably, for Cardano, the major capitulation events occurred in two waves, with the second wave being smaller than the first. Historically, the first accumulation wave has attracted traders who want to make quick money and exit before losing everything in the second wave.

Less growth in favor of ADA value

On November 2, Cardano’s development activity made a new local high. Significantly higher growth activity appears to be accompanied by price increases.

However, development activity data from SanBase showed that development activity has now fallen along with the ADA value.

Cardano Development Activity |  Source: SanBase
Cardano Development Activity | Source: SanBase

Cardano has seen a significant increase in daily on-chain volume, which could further induce some selling pressure if short-term gains are made.

ADA’s high whale transaction count supported the above argument that the Cardano whale was rather active. Most are now likely to be sold or redistributed.

Whale transactions and daily on-chain volume losses |  Source: SanBase
Whale transactions and daily on-chain volume losses | Source: SanBase

Most of ADA’s on-chain metrics presented slow price growth ahead of ADA holders. In the case of short-term bullish price action, ADA is likely to appreciate between $0.40-$0.50.

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