The reason ADA’s price has fallen will surprise you
While it is often believed that the price of an asset drives market sentiment, some interesting observations call that view into question. These indicators show that neither the price action nor the network activity determine the value development of the coin, but the transaction volume.
ADA waste is due to psychology?
Yes. FUD, or investor concerns about Bitcoin’s price action, which appears to be driving ADA’s performance. The ADA price has stayed below the 30 MA since the market-wide decline initiated by BTC in May. It means the mood has turned bearish.
Daily ADA / USD chart | Source: TradingView
Meanwhile, Social Volume, Average Sentiment (Reddit), and Total Positive Sentiment all correspond to the price action. A closer look reveals similarities, even if there are some differences in their movements at the beginning of the year. But the difference seems negligible since then.
Psychosocial, developer activity, trading volume (MA 30) | Source: Mood
This is because trading volume during the April-May rally and in the post-crash period is highly correlated with social sentiment. Somehow all three social indicators went up just before the volume went up. While the sentiment is at ATH, the volume still follows. When these indicators fall quickly, so does volume.
The price movement has nothing to do with it, because even before the ATH these indicators followed the volume of Cardano. Your movements will only become tight after the climb.
What about the network? Star?
Surprisingly, the network has nothing to do with the ADA price movement. Although developer activity was lowest in May 2021, volume remained high. Although activity is booming at this point, both price and volume are declining. As a result, the transaction volume has also decreased significantly, and with it the active addresses.
Trading volume | Source: Messari
Active address of ADA | Source: : Messari
So if you’re a Cardano investor and you’re looking for answers on why ADA is underperforming, one of the reasons could be investor sentiment.
According to Ambcrypto