Cardano (ADA) has been making headlines recently for reaching a new 2023 peak of $0.45 on April 15. However, the past week has seen a 15% retracement, which has sparked bearish concerns among investors and network participants.
Despite the recent price correction, Cardano transaction volumes have been steadily rising. This has led some investors to wonder if the widespread negative market sentiment surrounding ADA suggests that its price has reached a local bottom.
Cardano Investors Are Growing Pessimistic
On-chain data from Santiment indicates that the social perception surrounding Cardano (ADA) has taken a negative turn in recent weeks. The Weighted Sentiment metric, which evaluates the social sentiment surrounding a project by evaluating the ratio of positive mentions to negative mentions across relevant crypto media channels, has been trending downward since mid-March.
Since the recent ADA price approached $0.45 on Apr. 14, Weighted Sentiment has declined from 1.10 to -0.34. Generally, Weighted Sentiment tracks the market perception of a particular asset by comparing the ratio of positive social media mentions to negative ones. When Weighted Sentiment declines to a new local low, it typically signals an impending reversal of an ongoing bearish trend. Historically, it is a contrarian indicator, and the price tends to move in the opposite direction of crowd expectations.
Hence, a bullish reversal could soon be triggered by strategic investors looking to buy at the bottom, interpreting the current widespread pessimism surrounding Cardano as perfect timing to buy.
Positive Divergence Between ADA Price And Daily Transaction Volume
On a more bullish note, a positive divergence exists between the ADA price and the daily transaction volume recorded on the Cardano network. Despite the 15% decline in price between April 15 and April 25, Daily Transaction Volume has consistently remained above $2.5 billion during that period. When transaction volumes remain high during a price correction, it signals an imminent bullish reversal.
ADA Price Prediction: Up Next, $0.50
The next bullish price movement will likely see Cardano’s price reach a new 2023 peak of $0.50. IntoTheBlock’s Global In/Out of Money data shows that ADA will initially face considerable resistance around the average price zone of $0.42. At this zone, a cluster of 432,000 holders bought 4.65 billion ADA coins.
However, if Cardano bulls can push past that level, the price rally can proceed toward $0.53. At that zone, ADA may experience some selling pressure from 436,000 addresses that bought 2.53 billion coins at an average buy price of $0.52.
Still, if Cardano fails to hold the critical $0.38 support level, things could take a bearish turn. However, the 297,000 addresses holding 6.22 billion ADA within this cluster at an average price of $0.38 will likely prevent this. If that support level fails, crypto investors can expect ADA price to slide much lower towards $0.31.
In summary, the negative weighted sentiment suggests that Cardano is approaching a local bottom. But if the transaction volumes remain healthy, ADA holders could expect a price upswing in the coming days, with the next bullish price movement expected to push Cardano’s price to a new 2023 peak of $0.50.
