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Cardano to Boost Circulating Supply by 0.05% This Week - Can This Move Replenish ADA's Price?

By Rida Fatima

Cardano to Boost Circulating Supply by 0.05% This Week - Can This Move Replenish ADA's Price?

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Cardano (ADA) will unlock 18.53 million tokens, accounting for 0.05% of its circulating supply, valued at approximately $6.68 million. This token unlock is expected to contribute to the market's circulating supply, influencing liquidity and overall market sentiment.

While ADA is currently bearish, the upcoming token unlock adds another layer of complexity to its price action. The event will likely pressure the market, but it is essential to monitor how quickly these tokens are sold or reabsorbed.

Cardano's price has consistently dropped across multiple timeframes, reflecting a persistent bearish trend. Over the past month, ADA's price has fallen by 7.90%, with a weekly decline of 0.74% and a daily decrease of 3.26%.

This downward momentum is further highlighted by the 0.88% drop in its 24-hour trading volume, which now stands at approximately $290.18 million.

ADA's market cap has also mirrored its price decline, down by 3.26%, now hovering around $11.97 billion. These short-term performance indicators reinforce the notion that ADA is facing a challenging period.

The upcoming token unlock event could amplify this negative outlook due to consistent drops across timeframes. Increased circulating supply without matching demand could lead to additional downward pressure on ADA's price.

This could cause cautious sentiment among investors, especially in the short term. However, it is essential to view ADA's outlook through a long-term lens, factoring in technical indicators and potential developments within the Cardano ecosystem.

The anticipation is palpable in the crypto world as Cardano gears up for a pivotal event. On October 27, 2024, the network will unlock 18.53 million ADA tokens, a significant moment for the platform and its community.

This release, accounting for 0.5% of ADA's total supply, coincides with Cardano's seventh anniversary and its approach to 100 million transactions. The event could significantly influence Cardano's immediate market position and long-term standing in the competitive crypto space.

The tokens, valued at approximately $7.37 million, will be allocated for staking, treasury management, and reserve funding. These strategic allocations are expected to increase liquidity within the Cardano ecosystem, supporting its development and growing community.

Interestingly, a similar token unlock in September did not negatively affect ADA's price, and Cardano maintained a bullish trend. So, as Cardano approaches this 18 million token release, market analysts monitor its potential impact.

Cardano (ADA) has recently displayed a clear bearish trend, evidenced by the formation of two consecutive bearish candles over the past two days. This pattern indicates a consistent presence of sellers in the market, pushing the price down and reflecting a lack of buying pressure.

Consequently, ADA has dropped below the middle Bollinger Band, suggesting a potential shift in market sentiment. ADA is now hovering just a few pips above the lower Bollinger Band, a dynamic support level at approximately $0.336.

This area is crucial, as it may offer some buying interest if the price continues to decline. A breach below this support could signal further bearish momentum and open the door to additional selling pressure.

Also, the Moving Average Convergence Divergence (MACD) indicator has fallen below the signal line, reinforcing the bearish outlook.

The indicator displays a bold red histogram bar, indicating downward solid momentum in the asset's price. This suggests that sellers are gaining control, and if the current trend persists, the likelihood of further price declines could increase.

Cardano's Relative Strength Index (RSI) has been trending downward from 44, the neutral zone. This decline indicates that the asset is losing momentum and moving closer to oversold territory (below 30).

Meanwhile, considering ADA's historical trend in the past token unlocks, analysts expect this upcoming unlock to have the same impact on the asset.

If that happens, buyers will outnumber sellers, and the RSI will run toward the overbought zone (above 70).

However, if not, a swift dip of the RSI into the oversold zone is likely to occur. Given the cryptocurrency market's inherent volatility, potential investors must approach ADA with caution.

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