- Social media engagement and user activity have been falling in the past six weeks.
- The NVT and mean coin age metrics posed a dilemma to investors.
Cardano [ADA] was unable to shake off its bearish bias. Technical analysis revealed that further losses remained likely for the token.
A lack of demand was a major reason, and bullish sentiment has also been negligible.
Bitcoin [BTC] was unable to break out of the $60.8k-$63.3k region, and Cardano was also stuck within the $0.43-$0.47 area. Do on-chain metrics hint at a bullish breakout, or reinforce the bearish expectations?
Development activity was high but the good news stops there
Source: Santiment
A high development activity shows that the project is continually fixing issues or otherwise preparing to ship new features.
Overall, it is a good sign for long-term investors, and Cardano did not slouch in this department.
Yet, the other metrics like daily active addresses and social volume have been in a decline since mid-March.
It indicated fewer users were utilizing the network for transactions and that social media engagements had fallen off. Moreover, the Weighted Sentiment has been negative for a good chunk of the past six weeks.
The online engagement has been negative or bearish, which does not bode well for the short-term price prospects. However, these factors alone do not indicate a drop is inbound.
The contradicting signs — is ADA undervalued or not?
Source: Santiment
The 30-day MVRV ratio has been negative since mid-March, showing an extremely undervalued asset in the short-term.
However, despite this development, the price trend has been bearish. During this time, the mean coin age has trended rapidly higher, showing accumulation in place.
It presented a good opportunity for swing traders to buy, as ADA was also at the range low. Yet, the NVT revealed something else.
The Network Value to Transactions (NVT) ratio calculated using the daily circulation has also trended higher since mid-March.
This indicated that the network was likely overvalued, or expensive, compared to its low ability to transact tokens. This has bearish implication for the network usage, and in turn, the future demand.
Read Cardano’s [ADA] Price Prediction 2024-25
Therefore, putting these clues together with the technical analysis, it appeared that Cardano is likely headed for more losses.
A Bitcoin breakout might halt or reverse the downtrend, but the evidence at hand was not bullish.
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