Cardano (ADA) has seen a significant surge in price following the Federal Reserve’s interest rate cuts announcement, which has brought optimism to the crypto market. However, concerns have arisen about the sustainability of this rally. On-chain metrics from Santiment indicate a decline in demand for ADA, raising doubts about the current uptrend.
The daily active-address (DAA) divergence for Cardano has been negative since September 7, indicating a troubling trend. This suggests that ADA’s recent rally may be driven more by market sentiment rather than organic demand for the cryptocurrency itself. Without sustained buying pressure, ADA could experience a sharp correction as traders start to take profits.
If ADA fails to break above its resistance level of $0.41, analysts predict a deeper correction that could push the price back to its yearly low of $0.27. With weakening demand and increasing selling pressure, the near-term outlook for Cardano is uncertain, and traders are preparing for potential downside risk.
Currently, ADA is trading at $0.38, facing a crucial resistance level at $0.41. Reclaiming this level and surpassing the next resistance at $0.45 would confirm a bullish trend. However, failure to do so could result in increased selling and a potential 30% drop, putting ADA at risk of revisiting its yearly low.
Given the current market uncertainty and declining demand, traders are closely monitoring ADA’s price movements to determine whether a bullish breakout or a deeper correction is imminent.