Cardano: The reason for its current decline may surprise you.

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While it is commonly thought that an asset’s price determines market mood, certain intriguing observations call this concept into question. These measurements demonstrate how the coin’s performance is determined by the holders rather than the price action or the potential of the coin’s network.

Cardano’s fall due to sentiment?

Yes, it is. Call it FUD or investor anxiety over Bitcoin‘s price behaviour, but this seems to be dictating how ADA moves. Instead of pricing, social emotion dictated its volume. When the 30-day Simple Moving Averages are plotted, it is clear that emotion was driving the inflows and outflows of this cryptocurrency.

The rationale for the emphasis on volume is because the price action does not follow the pattern when the 30-day SMA is placed on it.

Cardano 30-day SMA (blue) incongruous with the metrics | Source: TradingView – AMBCrypto

Social Volumes, Average Sentiment (Reddit), and Total Positive Sentiment, on the other hand, all follow the pattern that volume registered. A deeper examination indicates the same, albeit there was some variation in their motions towards the start of the year. However, the difference has now become practically insignificant.

Social Sentiments, Developer Activity and Volume on a 30-day SMA | Source: Santiment – AMBCrypto

This is because the April-May increase, as well as the volumes throughout the crash’s subsequent time period, show a suspicious link with societal mood. Even before the volume increased, all three social indicators were rising. While sentiment was at an all-time high, volumes were still trailing by 24 hours. Similarly, when these indicators dropped rapidly, so did the volumes.

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The price action had nothing to do with it since, even before the ATHs, these indicators were following Cardano’s volumes. Their movement only grew tighter after the hike.


What about the network?

Surprisingly, the network has little to do with the ADA’s market movement. Despite the fact that developer activity was at its lowest in 2021 in May, volumes remained strong. Similarly, despite the fact that there was a lot of development going on at the time, both prices and volumes were down. Furthermore, as a result of this, transaction volumes and active addresses have decreased substantially.

Both of these indicators represent, in some ways, the total of trade volumes and social mood, which explains why they were also low.


Transaction Volume | Source: Messari – AMBCrypto


Cardano Active Addresses | Source: Messari – AMBCrypto

So if you are a Cardano investor and have been looking for an answer as to why ADA is performing terribly, one of the reasons can be attributed to investor sentiment.

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