Cardano Developers (ADA) recently teased Hydra Baya new layer 2 instant payment and settlement product. Historical on-chain data indicates that the price of ADA could double if the product is well received by the community.

In mid-January 2023, Cardano launched its algorithmic stablecoin on its original beta network. After the mainnet was launched in February, the transactions of Cardano whales instantly increased by 400%. Within 3 months, the price of ADA increased by 40%, reaching a 2023 peak of $0.46 on April 16th.

will Hydra Bay Have a similar effect on Cardano (ADA) price?

Cardano transaction sizes could double

According to the “cheap and fast” website Hydra Bay Technical specifications Transactions will be denominated in the original ADA token. If all goes as planned, this could lead to Cardano’s transaction volumes skyrocketing, driving up prices.

As shown below, the recent marginal increase in ADA transaction volume has already led to a moderate price hike in July.

On July 1, cardano holders traded a total of 7.32 billion ADA coins. By the end of July 9, that number had grown 7% to 7.85 billion ADA.

transaction size By assessing the underlying demand for products and services built on the blockchain network. When it goes up, the price of the original token usually heads higher as well.

If a product like Hydra Bay It potentially expands the range of utility offered by Cardano, and the demand for ADA could skyrocket.

As we saw above, the ADA has already recorded a 3% price hike between July 6th and July 9th, showing early signs of what could happen if Hydra Bay Well received.

An increase in Staking Cardano can lead to a decrease in the exchange supply

Moreover, the Hydra Pay The specification also specifies that users will be required to share funds in a smart contract before transactions are published. If it gains traction, a surge in ADA bets could inadvertently reduce the supply available on cryptocurrency exchanges.

As shown below, total Order books A number of cryptocurrency exchanges show that demand for ADA is already outpacing exchange supply.

Currently, investors have placed active orders to buy 65 million ADA coins. Meanwhile, dealers are only willing to sell 56.4 million ADA at current prices.

the Depth of the exchange market in series The graph shows the price distribution of limit orders across recognized crypto exchanges.

The graph above shows that demand for ADA currently exceeds supply by about 8.6 million coins. If Hydra Pay becomes a hit among Cardano investors, the exchange’s supply could drop further as the stakes rise.

The resulting upward pressure could push ADA’s price to a new peak in 2023.

ADA Price Prediction: $0.50 in long-term focus

with the Hydra Bay The launch is still some months away, the SEC FUD looms large, and the ADA rate is likely to remain neutral in the short term.

However, on-chain data shows that approximately 81% of ADA holders are currently in a net loss position. Since they are probably not willing to sell at a loss, a large spike in demand could drive up prices in the long run.

If the bulls can break above $0.30, then the $0.35 mark is the next important resistance to overcome.

In that region, about 982,000 investors have bought 10.6 billion ADA coins at an average price of $0.35. If they decide to exit their positions once they break even, the ADA price could roll back.

But, if Hydra Pay releases a strong bullish momentum, ADA price could reach a new high in 2023 at $0.50.

Conversely, the bears could gain a foothold if the FUD case worsens from the SEC lawsuit and stock delisting and the ADA price drops below $0.25. However, a group of 69,000 investors bought 1.63 billion ADA at an average price of $0.27.

They can install a supportive buying wall to avoid slipping into a net loss position. However, if the support cannot hold, ADA could drop towards $0.25 again.