- Cardano’s price has pulled back by 3.67% after a 20% rally, with bearish divergence and declining user activity signaling potential weakness.
- ADA may face consolidation before a possible recovery, depending on increased buying pressure and network engagement.
Cardano (ADA) has experienced notable price action in recent weeks, with a 20% rally pushing its value to $0.85 earlier in May. However, after a slight pullback of 3.67% in the last 24 hours, ADA now trades at $0.79. Despite the impressive surge, recent on-chain signals are hinting at a possible slowdown, raising questions about whether ADA will continue its upward momentum or face a deeper correction in the short term.
Bearish Divergence Signals Weakening Momentum
The latest charts suggest that ADA’s rally might be running out of steam. The Chaikin Money Flow (CMF), which measures buying and selling pressure, has dropped significantly from 0.42 to -0.11, indicating a shift in sentiment from accumulation to selling. This bearish divergence signals a potential weakening in market demand, meaning the altcoin could face some consolidation before a possible recovery.
Cardano had been in an ascending channel since April 7, forming higher lows and higher highs despite intermittent pullbacks. However, as the CMF points to diminishing buying pressure, the previously anticipated $1 price target seems increasingly unlikely in the near future.
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Declining User Activity Signals Further Struggles
Adding to the bearish outlook, the Price-Daily Active Addresses (DAA) divergence shows a troubling trend. The DAA metric tracks the relationship between price and network activity, and a negative divergence—like the current -48.70 reading—suggests that ADA’s price increase is not supported by growing user engagement. As network participation weakens, Cardano could face difficulty maintaining its recent price levels.
What’s Next for ADA?
While the short-term outlook for Cardano appears cautious, there is still room for a potential reversal. Should buying pressure pick up and network activity see a boost, ADA could push past the $0.85 resistance and target the $1 mark once again. However, if current trends persist, Cardano might retrace further, possibly testing the $0.67 region near the 0.236 Fibonacci retracement level.
In conclusion, while ADA has demonstrated impressive growth, the bearish signals in the market suggest that the altcoin might face some headwinds before making another push towards higher price levels. Investors will need to monitor volume and network activity closely for signs of a potential recovery.
