Cardano (ADA) developers recently teased Hydra Pay, a new layer-2 payment and instant settlement product. Historical on-chain data suggest that ADA price could double if the product is well-received by the community.
In mid-January 2023, Cardano launched the Djed algorithmic stablecoin on its native testnet. After the mainnet launch in February, Cardano whale transactions instantly spiked 400%. And within 3 months, ADA price gained 40%, reaching a 2023 peak of $0.46 on April 16.
Will Hydra Pay have a similar impact on Cardano (ADA) price?
Cardano Transaction Volumes Could Double
According to the “cheap and fast” Hydra Pay technical specifications, transactions will be denominated in the native ADA token. If things go to plan, this could see Cardano transaction volumes spike significantly and trigger a price surge.
As seen below, the recent marginal increase in ADA Transaction Volume has already triggered a mild-price surge in July.
On July 1, Cardano holders transacted a total of 7.32 billion ADA coins. And by the close of July 9, that figure had grown by 7% to reach 7.85 billion ADA.
Transaction Volume evaluates the underlying demand for products and services built on a blockchain network. When it increases, the price of the native token typically trends upward as well.
If a product like Hydra Pay potentially expands the scope of utility offered by Cardano, demand for ADA could skyrocket.
As seen above, ADA has already recorded a 3% price surge between July 6 and July 9, showing early signs of what could happen if Hydra Pay is well-received.
Increased Cardano Staking Could Drive Down Exchange Supply
Furthermore, the “Hydra Pay” specifications also outline that users will be required to stake funds in a smart contract before deploying transactions. If it gains traction, the spike in ADA staking could inadvertently reduce the supply available on crypto exchanges.
As seen below, aggregate Order Books of crypto exchanges show that ADA demand already outpaces exchange supply.
Currently, investors have placed active orders to buy 65 million ADA coins. Meanwhile, traders are only prepared to sell 56.4 million ADA at current prices.
The Exchange Market On-chain Depth chart shows the price distribution of limit orders across recognized crypto exchanges.
The chart above depicts that demand for ADA currently exceeds supply by a whopping 8.6 million coins. If Hydra Pay becomes a big hit among Cardano investors, exchange supply could drop even further as staking rises.
The resulting upward pressure could potentially catapult ADA price to a new 2023 peak.
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ADA Price Prediction: $0.50 in Long-term Focus
With the Hydra Pay launch still potentially months away and SEC FUD looming large, ADA price will likely remain neutral in the short term.
However, on-chain data shows that nearly 81% of ADA holders are currently in a net-loss position. As they are likely unwilling to sell at a loss, a significant surge in demand could trigger a price rally in the long run.
If the bulls can break above $0.30, the $0.35 milestone is the next significant resistance to beat.
At that zone, about 982,000 investors had bought 10.6 billion ADA coins at an average price of $0.35. If they decide to exit their positions once they break even, ADA price could retrace.
But, if Hydra Pay triggers a strong bullish momentum, ADA price could reach a new 2023 peak at $0.50
Conversely, the bears could gain a foothold if the FUD from the SEC lawsuit and exchange delistings worsen and ADA price slips below $0.25. However, a cluster of 69,000 investors had bought 1.63 billion ADA at the average price of $0.27.
They could mount a support buy wall to avoid slipping into a net-loss position. Nevertheless, if the support cannot hold, then ADA could drop toward $0.25 again.
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