Cardano (ADA) price reached a new 2023 peak of $0.45 on April 15. But over the past week, the ADA has retraced 15%, sparking bearish concerns among investors and network participants.
Despite the recent price correction, Cardano transaction volumes have been rising. Could the widespread negative market sentiment suggest that ADA price has reached a local bottom?
Cardano Investors Are Growing Pessimistic
The social perception surrounding Cardano (ADA) has taken a negative turn in recent weeks. According to on-chain data from Santiment, Cardano’s Weighted Sentiment has been trending downward since mid-March.
The Weighted Sentiment metric evaluates the social sentiment surrounding a project by evaluating the ratio of positive mentions to negative mentions across relevant crypto media channels.
Since the recent ADA price approached $0.45 on Apr. 14, Weighted sentiment has declined from 1.10 to -0.34.
Generally, Weighted Sentiment tracks the market perception of a particular asset by comparing the ratio of positive social media mentions to negative ones.
When Weighted Sentiment declines to a new local low, it typically signals an impending reversal of an ongoing bearish trend. Historically, it is a contrarian indicator. In this sense, the price typically tends to move in the opposite direction of crowd expectations.
Hence, a bullish reversal could soon be triggered by strategic investors looking to buy at the bottom could interpret the current widespread pessimism surrounding Cardano as perfect timing to buy.
There is a Positive Divergence Between ADA Price And Daily Transaction Volume
On a more bullish note, a positive divergence exists between the ADA price and the daily transaction volume recorded on the Cardano network.
Looking at the chart below, the Cardano price declined 15% between Apr. 15 and Apr. 25. But Daily Transaction Volume has consistently remained above $2.5 billion during that period.
When transaction volumes remain high during a price correction, it signals an imminent bullish reversal.
In summary, the negative weighted sentiment suggests that Cardano is approaching a local bottom. And if the transaction volumes remain healthy, ADA holders could expect a price upswing in the coming days.
ADA Price Prediction: Up Next, $0.50
The next bullish price movement will likely see Cardano’s price reach a new 2023 peak of $0.50. IntoTheBlock’s Global In/Out of Money data shows that ADA will initially face considerable resistance around the average price zone of $0.42. Where a cluster of 432,000 holders bought 4.65 billion ADA coins.
But if Cardano bulls can push past that level, the price rally can proceed toward $0.53. At that zone, however, ADA may experience some selling pressure from 436,000 addresses that bought 2.53 billion coins at an average buy price of $0.52.
Still, if Cardano fails to hold the critical $0.38 support level, things could take a bearish turn. But the 297,000 addresses holding 6.22 billion ADA within this cluster at an average price of $0.38 will likely prevent this.
If that support level fails, crypto investors can expect ADA price to slide much lower towards $0.31.
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