Cardano price has been punched in the past few days, crashing by 20% from its highest level this year and moving into a technical bear market. ADA may be at risk of more sell-offs after forming a head and shoulders pattern as the number of active addresses drops.
ADA active addresses have retreated
Cardano performed strongly in November after Donald Trump’s victory. The rally happened as Charles Hoskinson hinted that he would be a member of the crypto council that Donald Trump has proposed.
He also hinted that he was about to sign the biggest deal of his life. Days later, he sent a picture of himself in front of SpaceX, a sign that he wanted to ink a partnership with the company. That would have been a big deal since Elon Musk, the richest person globally, owns SpaceX. Also, Cardano recently became the first blockchain network to pass a constitution.
The rising hopes helped push Cardano’s total value to over $700 million, a record high. It also led to more mentions on social media X and Fear of Missing Out (FOMO).
Now, however, there are signs that many people who bought ADA have started to capitulate. Data by IntoTheBlock shows that the number of active addresses on Cardano has dropped from over 113k in November to less than 50k. Daily new addresses have also fallen from over 30k to below 19k.
This decline is a sign that Cardano has stopped gaining traction among investors. Also, the total value locked in its ecosystem has fallen from over $700 million in November to $554 million today. This decline may continue if the coin loses momentum.
Read more: Red Alert: Cardano Price is Slowly Forming a Risky Pattern
Cardano price is at risk of falling to $0.80
The daily chart shows that Cardano’s price has retreated in the past few days. It has formed what looks like a head and shoulders chart pattern, a popular bearish sign in the market. The head of this pattern is at $1.3297, while the shoulders are around $1.10.
The coin has also stabilized at the 23.6% Fibonacci Retracement level. It also remains above the 25-day moving average. If the H&S pattern works out, there is a likelihood that it will drop to $0.80, its highest swing in March this year. That would imply a 25% drop from the current level.
On the flip side, a more bullish push would have the Cardano price jump to the year-to-date high of $1.3297.
