Cardano saw a robust 26% gain after the Federal Reserve announced interest rate cuts two weeks ago, boosting optimism in the cryptocurrency market.

Analysts and investors question the sustainability of the recent growth. Despite the initial rally, Cardano’s price failed to close above a key resistance level, signaling a potential weakening in the uptrend.

On-chain data from Santiment reveals withering demand for ADA, making investors more cautious. Decreased online activity and purchasing pressure raise doubts about the durability of the current bull market.

As the market awaits further developments, investors are closely watching for signs of a reversal or continuation of the uptrend, understanding that ADA’s next move could set the tone for its results in the coming weeks.

The Cardano indicator shows relevant data

Cardano faces significant risk of a 30% decline to yearly lows of around $0.27, as on-chain data from Santiment indicates increasing sales pressure and decreasing demand.

Warning signs regarding ADA price have become clearer, with the Daily Active Address (DAA) divergence at the time of writing pointing to a negative reading of -43.3%. This indicator, which tracks the correlation between changes in asset prices and changes in their daily lively addresses, has remained negative since September 7, indicating a worrying trend for Cardano.

The negative divergence on DAA suggests that much of the escalate in ADA this month, following the Federal Reserve’s rate cuts, was driven by general market sentiment rather than specific demand for ADA itself. The lack of organic demand increases the likelihood of a piercing correction in the compact term.

Without sustained buying pressure, Cardano’s price could plummet as investors start locking in profits, driving prices even lower.

If ADA fails to break above the current resistance level of around $0.41, analysts expect a deeper correction that could push the price back to the yearly low of $0.27. Amid weakening demand and increasing selling pressure, Cardano’s near-term prospects appear uncertain, and investors are bracing for further downside risks.

ADA Price Action: Testing a Key Supply Level

ADA is trading at $0.38, down 10% from the $200 daily exponential moving average (EMA) at $0.41. This level has become a key resistance area as price has formed a modern local high around this zone.

ADA needs to reclaim the $0.41 level and break above the next key resistance at $0.45 to confirm the bullish trend for the coming weeks. A successful break of these levels would signal renewed strength, giving the bulls control and potentially leading to higher prices.

However, if ADA fails to break above these critical levels, the altcoin may face further downward pressure. An inability to recover $0.41 and exceed $0.45 would likely lead to an escalate in sales, causing a potential decline of 30%. In such a scenario, ADA would be at risk of again hitting an annual low of around $0.27.

Given the current market uncertainty and withering demand, investors are closely watching ADA price movements as the next few days could be crucial in determining whether a bullish breakout or a deeper correction is on the horizon.

Featured image from Dall-E, chart from TradingView