Cardano’s native token (ADA) has risen 3.07% in the last 24 hours, trading at $0.996 at the time of writing.
However, low trading volumes and liquidity concerns weigh on its performance. Despite a strong gain earlier this month, ADA’s bullish momentum has diminished, according to recent CoinMarketCap data.
ADA’s 24-hour Price Chart. | Source: CoinMarketCap
Like most other cryptocurrencies, ADA’s price spiked in early November following the outcome of the United States elections. Trading volumes increased from $241 million on Nov. 5 to $6 billion on Nov. 16, culminating at $6.2 billion on Nov. 24.
Cardano’s Declining Trading Volume
However, these volumes have fallen to $3.32 billion, a 24.27% drop in the last 24 hours, indicating declining market activity. Trading volume is a key measure of market sentiment.
High trading volumes are usually a precursor to higher price trends, while a drop indicates diminished investor interest, which generally leads to price decreases. This drop in interest is obvious in ADA’s trading history, suggesting that further price drops are imminent.
Liquidity Concerns and ADA’s Price
Meanwhile, Cardano’s liquidation heatmap, per CoinGlass data, shows a strong concentration of liquidity around $0.94, implying that this price point could act as support. If ADA continues its downward trajectory, it could soon test this critical support level, adding to the asset’s pressure.
ADA Liquidation Heatmap, Nov. 25 | Source: CoinGlass
Technical Indicators Suggest Bearish Outlook
On the technical front, ADA has crossed the upper region of the Bollinger Bands, indicating that it’s in overbought territory and increased selling pressure. Bollinger Bands tracks price volatility and frequently signals possible sell zones when prices are near the upper limit.
ADA’s upper band alignment raises the possibility of a pullback to $0.95, corresponding to the 23.6% Fibonacci retracement level. Furthermore, ADA’s relative strength index (RSI) at 0.84 confirms the overbought conditions.
Thus, a price correction is imminent unless a major increase in transaction volume changes market sentiment.
Analysts’ ADA Price Forecast
Despite short-term hurdles, analysts are bullish about ADA’s long-term direction. DW, a pseudonymous crypto analyst, observed a V-shape on the hourly chart, suggesting potential price gains till the $1.32 price region.
This analysis supports a bullish long-term picture, with any recovery reliant on improved market activity and investor confidence.