- If ADA’s trading volume increases, the price may fall further.
- Open interest is falling, suggesting that ADA could fall to $0.40.
AMBCrypto reported a surge in trading volume as Cardano (ADA) fell to $0.45. Between January 22nd and 23rd, Cardano’s trading volume jumped from 234 million to 453 million.
This means that a lot of transactions involving the token have occurred.
However, increased trading volume is not always good news for cryptocurrency prices. As prices rise and volume increases, these trends can indicate strong buyer interest.
This can also serve as a strength for price increases.
However, the opposite is true for an increase in trading volume as the price falls. For ADA, the trend could lead to further declines if volume continues to increase along with price declines.
Source: Santiment
It’s the season when bears shine
Technical outlook shows that the 20-day EMA (yellow) is above the 9-day EMA (blue). This trend is considered bearish.
Additionally, the price of ADA has fallen below both EMAs, suggesting that a near-term recovery may not be an option.
Chaikin Money Flow (CMF) also showed a similar trend, falling to -0.07.
These negative numbers suggest that selling pressure has been strong and if the bulls don’t reduce momentum soon, ADA could fall to $0.40.
As for the Arun indicator, Arun Up (orange) recorded 14.29% on the 4-hour chart. On the other hand, Arundown (blue) was 100%.
This difference was evidence of the bearish momentum facing the Cardano native token.
The relative strength index (RSI) fell to 24.16, suggesting that ADA is overbought. Prices may continue to fall, but RSI readings have shown that a bounce could be near. But it depends.
Source: TradingView
As more capital flows into the Cardano market, ADA may have a chance at recovery. However, lack of liquidity can lead to flows in the opposite direction.
Therefore, traders may need to be careful about the dynamics ahead.
There’s no way out of the dump yet
In terms of open interest (OI), Coinglass fell to $231.61 million. OI is the number of outstanding futures contracts related to a cryptocurrency.
If it increases, it means that market participants are increasing their net positioning.
However, lower OI means less liquidity and more liquidation of positions. Regarding price action, OI indicates that ADA may continue to sell off.
This is because speculation surrounding tokens has decreased.
Source: Coinglass
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If the condition remains unchanged, it is likely that ADA will fall below $0.45, which is key support. At the same time, traders should be cautious of the possibility of a reversal following a possible decline.
If ADA falls below $0.40, it could be a good entry before the next uptrend.