Cardano (ADA) holders reacted with panic selling on March 20th, triggered by a decline in the token’s price to $0.58. This move was reflected in Cardano’s Network Realized Profit/Loss, which spiked to 6.1 million, indicating a significant shift in on-chain transactions towards profit.
Source: Santiment
Initial Decline and Recovery
Despite the initial plunge, ADA’s price rebounded slightly to $0.61, marking a 1.25% increase within one hour of recovery. However, this was insufficient to offset the losses accumulated over the past week, amounting to a 19.73% decrease in ADA’s value.
Related article: Cardano’s Price Outlook: Bearish Patterns and Investor Strategies
The question arises whether panic selling ADA was a prudent decision. While some metrics suggested holders may have sold prematurely, others indicated it was a rational move in the short term.
Mean Dollar Invested Age (MDIA)
The MDIA, reflecting the average age of tokens weighted by purchase price, declined to 32.298. A decrease in MDIA implies investors are liquidating holdings, potentially leading to further price declines in the near future.
Related article: Cardano (ADA) Holders Facing Losses Amidst Price Decline
Contrary to MDIA, the MCA, which measures the age of tokens being moved, also decreased. A low MCA suggests accumulation by long-term holders, hinting at future bullish prospects despite short-term price volatility.
Source: Santiment
On the 4-hour ADA/USD chart, the Awesome Oscillator (AO) remained negative, indicating bearish momentum. However, the appearance of green histogram bars suggested a potential easing of this momentum.
Bollinger Bands (BB) and Chaikin Money Flow (CMF)
Analysis of Bollinger Bands (BB) revealed oversold conditions, with the lower band tapping ADA’s price at $0.58. Despite high volatility, the positive Chaikin Money Flow (CMF) suggested a possible price extension towards $0.70.
Source: TradingView
While panic selling may have provided some holders with minimal gains, the broader analysis suggests mixed signals regarding the optimal course of action.
Short-term indicators point to potential further declines, while long-term metrics hint at bullish sentiment. Ultimately, the decision to sell or hold ADA hinges on individual risk tolerance and investment horizon.
