Will Cardano (ADA) Price Respond to the Network's Low Inflation Rate?

The Cardano network demonstrates stability compared to other chains such as Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), and Polkadot (DOT).

Cardano price started to consolidate on August 8th following signs of market weakness on the Bitcoin price chart. The asset broke down from a bearish setup, suggesting further declines.

Meanwhile, the Chang hard fork edges closer as 79% of nodes have already migrated to v9.1.0. Notably, Cardano boasts a low inflation rate of 2.5% per annum. But can these developments save ADA from an impending drop?

Cardano Network Boasts Low Inflation, But Will It Help ADA?

According to ADA Whale, the Cardano network has been boasting stability compared to other chains like Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), and Polkadot (DOT).

The ADA Whale highlights that Cardano’s inflation rate is currently pegged at 2.5% per annum, which is lower than the other mentioned chains. This low inflation rate indicates steady and stable network growth.

Cardano had an inflation of 2.5% over the last 1y. For comparison, Sol: 14%. Avax: 15%. Cosmos: 13%. Dot: 10%

Cardano has achieved stable, significant levels of adoption with low inflation

These are what we call the fundamentals. And it explains why Cardano will remain up there.

The network also implemented the Hydra upgrade on August 9th to improve scaling capabilities. Together with the upcoming Chang hard fork, these enhancements could help ADA finally cross the critical $1 price level.

Cardano Price Analysis: Bearish Setup Threatens ADA

ADA price shows a bearish bias in the short term. It recently broke down from a rising wedge pattern, which usually indicates a trend reversal. This breakdown suggests further potential downside.

The price action is also trending below both the 50-day ($0.3457) and the 200-day ($0.3788) exponential moving averages (EMAs), which reinforces the bearish trend. Here are the support and resistance levels for Cardano:

The Relative Strength Index (RSI) is at 40.42, which is approaching the oversold territory. This indicates that while the bearish momentum is strong, the asset could be nearing an area where buyers may enter the market.

The Chaikin Money Flow (CMF) shows the buy or sell pressure on an asset at -0.14. This indicates that more capital is flowing out of ADA than into it, which aligns with the current bearish sentiment.

If the price of ADA breaks below the $0.28 support level, the short-term drop may become a fully-fledged continuation of the bearish trend. Cardano will seek further support lower around $0.24

On-Chain Metrics Anticipate Short-Term Drop in ADA Price

The Global In/Out of the Money (GIOM) metric, which measures the overall profitability of an asset's holders, shows that 84% of ADA holders are currently underwater at a虧損 price of $0.32. This indicates that the majority of holders may be feeling the pressure to sell their holdings if the price drops further.

The Net Unrealized Loss (NUL) also supports the short-term bearish outlook. It shows that the total aggregate losses of ADA holders are currently higher than their gains at a虧損 of $0.94. This suggests that holders may be more inclined to sell their assets at a loss if the price continues to fall.

Overall, on-chain metrics anticipate a short-term drop in ADA price, aligning with the technical and price action analysis.

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