Cardano remains in a complicated state on the cryptocurrency market. The asset could not find any support from institutional investors in 2021 and has not gained any redemption in 2023. Two years of active selling made Cardano extremely undervalued compared to Ethereum, Solana and other competitors. But does it necessarily mean that ADA will rally in 2023?
According to the analytical platform's insights blog post, there are some signs that sellers are becoming exhausted. On every downward movement in ADA, there are fewer coins at a loss on the network, which shows continuously decreasing selling power on the network.
📊 Is #Cardano severely undervalued at this point? One of @santimentfeed's key community members certainly sees data making this case, such as sharks & whales (holding 100K to 10M $ADA) accumulating aggressively these past 6 weeks. Read the latest insight! https://t.co/TPskmWBsOH pic.twitter.com/HC0aEWIVns— Santiment (@santimentfeed) December 27, 2022
Additionally, we are seeing a downtrend in a trading volume — one of the strongest fading/reversal signals observed on the market. As a trend goes by, bulls or bears gradually lose their power, slowly giving the momentum away; at that point, a trend reversal happens. This could be the case for Cardano in 2023, especially if we see a general recovery of the cryptocurrency market.
However, the whole analysis was based on only a few indicators that do not give us any fundamental insight that would also allow us to confidently forecast the movement of ADA in 2023.
How things turn out now
Unfortunately, Cardano does not look like it is ready for a bounce as it has dropped to the local low once again, failing to gain momentum after showing a 7% price increase in the last four days.
The trading volume on the asset is indeed descending, but this does not necessarily tell us about the trend fading as it could also be the result of holidays on financial markets across the world. The tendency will most likely prevail up until Jan. 5.