Cardano On-Chain Activity Surges Despite Price Spiraling – Can ADA Bounce Back?
Cardano blockchain shows strong fundamentals in July, despite the price drop. Is its recent recovery hinting at a new rally?
Key Takeaways
- Cardano transactions increased by 1.62% in July.
- The price of ADA fell to $0.27, signaling a downtrend.
- Cardano could be starting a new bull phase.
Cardano’s price has been somewhat of an underwhelming roller coaster ride this year.
Since July, ADA has been in a downtrend, falling from $0.39 to $0.31 in the first week. Although it showed signs of recovery in the following weeks, reaching a high of $0.45, it quickly turned for the worse, dropping to $0.27 by Aug. 5, marking another yearly low.
Despite the prevailing weakness in its price movement, Cardano continues to experience rising on-chain activity and other positive signs. Could the surging network activity translate to a rally for ADA?
Cardano July Stats
Cardano Founder documented a significant improvement in July numbers in its latest report .
Key metrics showed that Cardano recorded 94.6 million transactions in July, a 1.62% increase from June.
The number of Plutus Scripts, representing smart contracts, reached 6,659, a 1.88% rise.
The total number of wallets increased by 0.71%, reaching 4.84 million, while delegated wallets saw a slight increase of 0.02%, totaling 1.35 million. Additionally, native tokens rose 1%, reaching 10.2 million.
The number of policies increased by 7.6%, totaling 150,477.
ADA Price Analysis
Cardano‘s price has been correcting since reaching $0.80 on March 14. By July 5, ADA dropped to a low of $0.32 on July 5, near the apex of the descending triangle. It wasn’t long before the Proof of Stake token recovered by 42%, reaching a high of $0.45 by July 17.
However, the recovery was short-lived, with ADA plunging to a lower low of $0.27 on Aug. 5.
We anticipated the recent price drop as part of a corrective wave two in a larger five-wave upward impulse. However, the recent low invalidates this possibility as it fell below the July 5 level, potentially signaling the conclusion of the bearish structure from March.
On the daily chart, the RSI dropped to the oversold zone at 26%, a level last seen on April 13. The Aug. 5 low landed on descending support and bounced, rising 23% to a high of $0.34 on Aug. 7. A wick on the daily candle indicated strong buyer support as the price quickly rebounded.
While further confirmation is needed, there is a strong chance ADA could be entering a new bullish phase. The strongest confirmation will be a breakout above the descending resistance, though this level remains unreliable with only two interaction points.
Alternatively, ADA might face resistance and get rejected below $0.40, potentially leading to further declines in August.
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