Cardano is experiencing difficulty below the $0.39 resistance level, and it is probable that short-term holders will sell, thereby intensifying the adverse momentum.
The price of Cardano (ADA) has been unable to regain its losses from the end of July, as the altcoin has been unable to surpass the $0.39 resistance level.
Although this current price action offers a favorable opportunity for certain short-term investors, it has the potential to result in a bearish scenario for the broader market. Cardano’s price remains under pressure, which increases the probability of further declines, as there has been no distinct breakout.
Cardano’s Market Value to Realised Value (MVRV) Long/Short Difference is presently at -20%, indicating adverse symptoms. This indicator serves to evaluate the potential for profit for both short-term and long-term investors.
The presence of highly negative values indicates that short-term holders will experience profits. Conversely, positive values indicate that long-term holders are profitable. This indicator indicates that short-term investors are more likely to achieve profits than long-term holders in the context of Cardano.
Although this may appear to be a positive development, it is actually a negative signal for the market. Short-term holders are more inclined to sell. Cardano’s price may experience additional declines as short-term investors attempt to maximise their profits.
Presently, approximately 5.7 billion ADA are in the possession of short-term investors, with a value exceeding $1.9 billion. Due to their tendency to remain inactive for less than one month, these addresses are more susceptible to rapid sale. Upon the sale of a substantial portion of this supply, Cardano’s price could experience a substantial decline, which would exacerbate the current adverse trend.
There is an elevated risk of a rapid sell-off due to the substantial preponderance of ADA held by short-term investors. Consequently, the macro momentum, which is influenced by short-term market participants, continues to have a significant impact on ADA’s outlook.
At present, Cardano is trading at $0.33, experiencing a consolidation period between $0.31 and $0.39. The altcoin has been unable to break out of this range, and the consolidation indicates that it is unlikely that ADA will experience significant upward movement in the near future.
Short-term holders are profitable and prepared to sell, as the broader market conditions are not favourable. If selling commences, ADA may experience a substantial decline, potentially resulting in the loss of support at $0.31.
Nevertheless, Cardano may still have a shot at a favorable outcome if short-term investors opt to hold rather than sell. A breach of the $0.39 resistance and its subsequent conversion to support would validate the present bearish outlook.
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