Price Analysis

ADA Price Faces Crossroads: Will the 7-Month High NVT Ratio Lead to a Crash?

Technical analysis reveals ADA price is struggling to maintain above key support levels and facing strong sell pressure between $0.372 and $0.4.
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ADA Price Faces Crossroads: Will the 7-Month High NVT Ratio Lead to a Crash?

Highlights

  • If Chang hard fork launch gets botched, ADA price could crash by 10%.
  • Futures traders placed a huge 7-day sell wall between $0.372 and $0.4.
  • Cardano Network Value to Transactions (NVT) ratio hit a 7-month high, signaling overvaluation.

ADA price is at a crossroads. With the Chang hard fork up ahead and a thin slice of support holding the price up, it is difficult to predict what will happen next. While on-chain metrics hint the market sentiment may be more bullish than bearish, analysis of traders’ behaviors shows they are bearish on the asset. Will ADA price survive the mixed sentiment in the market?

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Onchain Metrics Reveal ADA Price Potential Rally

Data from Santiment shows that the Cardano Network Value to Transactions (NVT) ratio hit a 7-month high, but the price has dropped for the last five days. When the NVT ratio spikes while the price decreases, it generally indicates a bearish signal for the crypto asset.

However, IntoTheBlock data shows large holder netflow increased from August 25 to 28 as the price dropped, which indicates that large investors or “whales” may be accumulating the asset despite the falling price. 

The buying activity from large holders can signal their confidence in the asset’s long-term potential, even if the short-term price action is negative. Coupled with the spike in the NVT ratio, this positive investor sentiment may signal they are pricing Cardano at a premium, possibly due to speculative interest or future growth expectations.

This accumulation may have provided a level of price support, as the increased demand from large holders eventually stabilizes or even pushes the price up, as seen on the Cardano technical analysis.

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ADA Technical Analysis: Temporary Support or Launch Pad?

The Cardano price tried to stay above the 50-day exponential moving average, but the selling pressure was too high. The price dropped below the 50 EMA (indicated by the green line), suggesting that a bearish momentum is dominant.

ADA price found support around $0.3550, where most of the whales seem to be building a buy wall. The candlestick analysis at this level shows small-bodied candles with wicks on both sides, indicating indecision in the market.

ADA price analysis chart

However, data from the Coinglass 7-day Liquidation Map shows a huge sell wall between $0.372 and $0.4. This means it will take a great effort to push the price beyond this price to the upside.

Conversely, there is a thin slice of sell buy order between $0.348 and $0.312, which, if eliminated, may result in an ADA price free fall to sub $0.3 price.

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Will Cardano Price Crash 10%?

ADA price remains overall bearish unless the price breaks above the previous high at $0.4. Positive investor sentiment can sustain the price up, but eventually, the profit-driven Futures traders have more power as they don’t have an actual stake in the asset – only leverage. The successful launch of Chang hard fork will go a long way in helping Cardano price decide the next course of direction.

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Frequently Asked Questions

What does the current NVT ratio for Cardano indicate?

The NVT ratio for Cardano has recently reached a 7-month high, suggesting that the network may be overvalued.

How have large holders or “whales” been behaving recently?

Data from IntoTheBlock shows that large holders have increased their netflow from August 25 to August 28, even as the price of ADA dropped.

Is there a risk of ADA price dropping by 10%?

Yes, there is a risk. If the price fails to break above $0.4 and the Chang hard fork launch is problematic, ADA could face a 10% price drop.
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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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