Cardano: Can you still ‘buy the dip’?

• Despite the hike in volume, ADA may have hit an overbought level.
• The price-DAA divergence revealed that ADA could be close to an entry point.

Although the crash in Cardano’s [ADA] price initially spelled disaster for token holders, it was also the foundation laid for some yearly highs. According to Santiment, several on-chin metrics, including the volume and active addresses, hit their peaks as ADA recovered between 10 and 11 June.

📈 The #Cardano capitulation happened more notably than other #altcoins during Friday’s crash. After prices fell -35% between June 5-9, the #buythedip opportunity came when $ADA volume, address activity, and social dominance all hit 2023 highs on Saturday. https://t.co/GJ1teKN3ed pic.twitter.com/ni5MILllNr

— Santiment (@santimentfeed) June 12, 2023

Is your portfolio green? Check the Cardano Profit Calculator

This hike suggested that there was an increase in transactions and utility on the Cardano network. The price increase, which almost hit 10% within a day, implied a surge in buying pressure. Additionally, it continued to enhance ADA’s overall out-performance of other altcoins.

The drawdown could be a chance to…

While the price of ADA has fluctuated of late, the token was still down by 21.23% (until press time) in the last seven days. Perhaps it could be a good idea to evaluate whether ADA’s price levels present a favorable opportunity to enter the market.

Based on the daily chart, ADA has failed to cross the $0.385 mark since 6 May. Even during a period where it experiences high accumulation, the resistance remained solid, thus pushing back the price.

However, recent selling pressure has affected the value, leading to the price dropping to $0.278. But at press time, bulls were attempting to push the price back to the $0.3 region. Still, this depends on how long the support at $0.262 would hold. 

Meanwhile, the Chaikin Money Flow (CMF) remained in the positive region. At 0.50, the CMF indicated the market was in an uptrend.

Source: TradingView

Since the value had crossed 0.20 at the time of writing, it could signal that ADA was overbought and the price could continue retracement. Thus, it could be dicey to consider that ADA’s price at this point could be a good entry point for the short term.

DAA outpaces ADA’s price

As for the price-Daily Active Addresses (DAA) divergence, Santiment showed that it was -27.27%. Historically, the metric can be instrumental in defining entry and exit points. 

For context, this metric explains the relationship between the price and DAA while assessing the way the broader market values a token.

Read Cardano’s [ADA] Price Prediction 2023-2024

This, however, depends on the directional movement of the DAA and price, respectively. Usually, a higher increase in the price than the DAA has proven to be an exit point. And when the price decreases more than the DAA, the same happens.

But with ADA, the DAA was outpacing the price. Therefore, ADA’s price at press time could be close to a short-term entry point, provided the market doesn’t experience significant shake-ups.

Source: Santiment