Cardano Faces Critical Test After $1.20 Break: What’s Next for ADA?

The cryptocurrency market has been quite volatile of late, and Cardano has not been spared the fluctuations that define this market. In recent days, the world’s 6th largest cryptocurrency based on market capitalization dropped below the $1.20 level, where around 93k addresses bought approximately 2.54 billion ADA. This has raised some questions as to what the future holds for ADA.

The current charts indicate that the price of Cardano has been in a gradual freefall. The previous support of $1.20 had been built from investor accumulation, and since this has been broken, then the next probable zone to observe is $1.00, where further accumulation may prevent a free fall.

Cardano’s $1.20 Breach Impact

As of the time of writing, ADA is trading at $1.01, which shows the project has slowed down considerably. The present technical analysis gives a neutral market perception because the Relative Strength Index (RSI) sits right in the middle of the neutral zone, meaning that there is no clear strength of buying or selling pressures, and this could mean a volatile market in the short run.

The breach of the $1.20 support level has created great anxiety among ADA holders, especially those who bought large amounts of ADA at this level. As this level is now gone, there is a possibility of even more selling pressure from those who are currently in a red zone with their ADA holdings, which may cause the coin’s price to decrease even more.

Rising On-Chain Activity

According to the In/Out of the Money Around Price chart, 34.44% of ADA holders are in profit, whereas 64.68% are loss-making. The difference in the holder sentiment in this context could lead to more selling pressure, which will also put more pressure on the ADA’s price in the short term.

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Nevertheless, Cardano has faced certain price restrictions, but its on-chain activity has been on the growth, with more addresses being active. In the past 30 days, the network has witnessed around 1.24 million active addresses, which means that people are still quite engaged in the ecosystem even in the presence of the current price fluctuations.

Nevertheless, it is still an open question if the growth in network traffic will be sufficient to stop the price drop. On-chain activity is still steady, suggesting that users are still engaged with the Cardano network, but market sentiment remains subdued and potential investors are waiting to see what events might affect the price of ADA in the future.

Cardano’s Path to Recovery

Having broken the $1.20 support level, the next major test for Cardano will be to see whether the $1.00 level can be defended as new support. If ADA can hold around this value, it may be possible for the asset to begin to strengthen, although much depends on the state of the market and the mood of investors.

The success of Cardano in these regards will mostly be determined by its capacity to retain the network’s user base and withstand the fluctuations of the crypto market. If negative market conditions remain constant, Cardano may be able to establish a strong ground for a comeback but if volatility continues to rise, further decline is not out of the question.

Over the next couple of days, the crypto market will be watching Cardano’s price action as it tries to bounce back and regain some of the losses it suffered recently. Traders are keeping an eye on several levels and hope that the growing activity of the network will restore the situation and possibly start driving up the price to higher levels in the near future.

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