Crypto: Fall in Active Addresses on Cardano, is ADA in Danger? Should we be Worried?

Cardano (ADA), long perceived as a safe bet in the crypto ecosystem, is currently at the heart of a puzzling contradiction: while its price sees a slight improvement, network activity indicators show a significant decline. This divergence, far from trivial, could be a sign of deeper vulnerability and foreshadows potential turbulence for this otherwise promising blockchain.

A worrying decline in user activity

Recent data provided by IntoTheBlock reveals a notable decline in address activity on the Cardano network. Within a week, the daily number of active addresses making at least one transaction with ADA dropped by 36%, a figure that demonstrates a growing disinterest in this crypto. This trend is even more alarming given that the number of new addresses created to trade Cardano’s native crypto fell by 46% over the same period, illustrating a loss of attractiveness among new market entrants. Despite the recent increase in the price of ADA, this decline in activity signals a weakening community support, which could pose problems for the long-term sustainability of the asset.

This decrease in user activity is all the more concerning given that it occurs in a context of overall price increases, usually seen as a positive signal for a crypto. However, the negative correlation observed between the price increase and the decline in active addresses suggests that this value increase is not supported by strong network engagement. This imbalance could indicate that ADA is currently overvalued, or worse, that investors are gradually withdrawing from the asset in anticipation of a future decline in its value.

Cardano facing a bearish signal from whale transactions

Beyond the decline in daily user activity, another crucial indicator confirms the concerns about Cardano’s crypto: the drastic reduction in whale transactions. These large holders, often perceived as market barometers, have reduced their transactions by 244% over the past month, according to available data. Such a reduction in net whale flows is typically interpreted as a bearish signal and suggests that these major actors anticipate a correction or a prolonged price decline.

The prospect of a new price decline becomes even clearer as analysts predict a possible return to $0.27, a level that could be reached if demand continues to weaken. This forecast, which implies a potential 20% decrease from current levels, is based on a clear observation: despite a temporary increase, the lack of user engagement and withdrawal of whales make the market vulnerable.

Although its inflation rate is extremely low, Cardano (ADA) finds itself at a crossroads. Its price appears solid, but its fundamentals are declining. If demand does not resume quickly, ADA could experience a severe correction.