Cardano (ADA) price reached a new 2023 peak of $0.45 on April 15th. But over the past week, ADA has rebounded 15%, sparking bearish fears among investors and participants in the network.
Despite the recent price correction, Cardano’s transaction volumes are on the rise. Could the broad negative market sentiment indicate that ADA price has hit a local bottom?
Cardano investors are becoming increasingly pessimistic
The social perception surrounding Cardano (ADA) has taken a negative turn in recent weeks. According to chain data from Santiment, Cardano’s weighted sentiment has been trending lower since mid-March.
The Weighted Sentiment Scale assesses the social sentiment surrounding a project by evaluating the ratio of positive to negative signals across the relevant encoded media channels.
Since the ADA price was last close to $0.45 on April 14, the weighted sentiment has fallen from 1.10 to -0.34.
In general, weighted sentiment tracks the market’s perception of a particular asset by comparing the ratio of positive to negative social media mentions.
When the weighted sentiment drops to a new local low, it usually indicates an imminent reversal of an ongoing downtrend. Historically, it is a mixed indicator. In this sense, the price usually tends to move in the opposite direction to the expectations of the masses.
Thus, a bullish reversal could occur soon by strategic investors looking to buy at the bottom. The current widespread pessimism surrounding Cardano could be interpreted as an ideal timing to buy.
There is a positive divergence between the price of ADA and the daily transaction volume
On a more bullish note, there is a positive divergence between the price of ADA and the daily transaction volume recorded on the Cardano network.
Looking at the chart below, Cardano’s price fell by 15% between April 15th and April 25th. But daily transaction volume has held steady above $2.5 billion over that period.
When transaction volumes remain high during a price correction, it indicates an imminent upward reversal.
In short, the negative weighted sentiment indicates that Cardano is approaching a local bottom. And if transaction volumes remain healthy, ADA holders can expect higher prices in the coming days.
ADA Price Prediction: Next, $0.50
The next bullish price move is likely to see Cardano price reach a new high in 2023 at $0.50. IntoTheBlock’s global In/Out of Money data shows that ADA will initially face significant resistance around the $0.42 average price area. A group of 432,000 holders bought 4.65 billion ADA coins.
But if Cardano bulls can cross this level, the price rally could advance towards $0.53. However, in that region, ADA could face some selling pressure from the 436,000 addresses that bought 2.53 billion coins at an average purchase price of $0.52.
However, if Cardano fails to hold the critical support level at $0.38, things may take a bearish turn. But the 297,000 addresses with 6.22 billion ADA within this group with an average price of $0.38 are likely to prevent that.
If this support level fails, cryptocurrency investors can expect ADA price to drop a lot towards $0.31.
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.