Cardano's ADA Drops 23.8% in Week, Nears Key Support Zone

Cardano's ADA has experienced a significant decline in recent weeks, with its price dropping by 23.8% over the past week, bringing it close to a key support zone between $0.56 and $0.51. Despite this downturn, ADA has managed to maintain a 7.2% gain over the past two weeks, although it has seen a 10% decrease over the past month. The asset's recent performance has been influenced by a major resistance level at $1.15, where it was rejected, leading to a downward trend.

Technical analysis of ADA's price chart on the 4-hour time frame reveals that the asset has been on a consistent decline since it encountered resistance at the $1.15 price region. This rejection at the resistance level has led to a downward move, with ADA's price currently nearing a major support level between $0.56 and $0.51. Historically, whenever ADA hits this support level, a major reversal to the upside occurs, with ADA surging above $1. If ADA reaches this support zone again and follows the historical pattern, it could rally to as high as $1 or even higher if it breaches the earlier resistance level.

On-chain metrics also provide insights into ADA's current state. The number of active addresses over a 7-day period has gradually descended in the past year, with a significant drop from over 400k addresses in November 2024 to as low as 141k earlier this month. Although there was a brief increase to 235k on March 9, the metric has since resumed its downtrend, sitting at 154k as of March 13. This drop in active addresses often reflects lower transaction demand, which could indicate reduced investor engagement or weakened network utility, potentially influencing Cardano's price movement in the long run.

Additionally, whale transactions, another major on-chain metric for Cardano, have steadily dropped from late last year. As of the latest data, ADA's whale transactions sat at just 4.73k transactions, a nearly 50% plunge from the above 9k transactions seen back in December. This decline in large-scale transactions could suggest that major investors are reducing their activity, possibly indicating a lack of confidence or shifting investment strategies. Despite these cautionary signs, the historical rebound pattern for ADA at the $0.56 to $0.51 support zone offers a glimmer of hope for a potential price recovery in the near future.