- ADA’s correlation with Bitcoin of 0.14 further compromises the risk despite the recent correction
- Bulls could help the token rise to $0.55 in the short term
Cardano [ADA] was one of the altcoins hit hard by the price crash over the past 24 hours. At the time of writing, ADA had lost 13.27% of its value while trading at $0.50 within the aforementioned period. This, after ADA briefly dropped to $0.46 on the charts.
Cardano’s performance caused it to suffer a heavier loss than other cryptocurrency in the top 10. As a result, the number of ADA holders at a loss also increased.
Using data obtained from IntoTheBlock, AMBCrypto found that only 36% of ADA holders made money at press time value. On the other hand, as many as 57% of holders are dealing with unrealized losses.
Source: IntoTheBlock
BTC may not offer ADA a helping hand
However, this incident cannot be attributed solely to the recent decline. The market has been in an early bull phase for a while now, but Cardano is underperforming. This has led to speculation as to whether the altcoin could one day help all its holders break this cycle.
A stumbling block here is the correlation with Bitcoin [BTC]. If you follow the market religiously, you will notice that BTC has a strong correlation with many top altcoins. However, ADA was not able to join this cohort with a price correlation of 0.14. The price correlation ranges between 0 and 1. Therefore, the above value implies that Bitcoin’s rebound does not necessarily mean ADA’s recovery.
Short-term forecasts aside, the long-term prospects didn’t look promising for ADA either. This is due to the actions of some whales.
Lower beliefs, lower prices?
According to AMBCryptos analysis on the chainwhale balances have fallen. For example, we have observed that those holding 1 million to 1 billion tokens have liquidated some of the ADA holdings.
As of March 15, the cohort of 1 to 10 million people held only 16.70% of the total supply. However, at the time of writing, that percentage had dropped to 16.20%.
A similar situation existed for the $100-$1 billion group, which initially owned 7.01% around the same period. However, the figures for this dropped to 5.92% at the time of writing.
Source: Santiment
A move like this signals a decline in confidence in Cardano’s long-term potential. Meanwhile, the Relative Strength Index (RSI) was 31.76, indicating that bulls were trying to move ADA out of oversold territory. Previously, the price crash sent the RSI to 19.53, which indicates an extreme bearish momentum.
A successful bullish attempt, supported by dip buying, could push the ADA towards $0.55. However, insufficient firepower could negate this contention, and the ADA could continue to fluctuate between $0.49 and $0.52 in the near term.
Source: Santiment
Read Cardanos [ADA] Price forecast 2024-2025
Additionally, several factors other than those mentioned above could impact ADA’s next step. For the long-term forecast, the price action after Bitcoin’s halving could determine whether the token is worth holding or not.