Cardano price faces possible 29% drop amid weakening demand

Cardano (CRYPTO:ADA) has seen a 12% price increase over the past month, but current indicators suggest that the cryptocurrency may face a potential decline in the coming weeks.

Recent market analysis shows signs of weakening demand and increasing selling activity, which could lead to a 29% price drop for ADA in October.

One of the main indicators supporting this forecast is the Chaikin Money Flow (CMF), which tracks the movement of capital in and out of an asset.

While the CMF remains positive, its recent downward trend suggests that the intensity of buying pressure is fading.

This indicates that the demand for Cardano may be slowing down, with fewer investors aggressively entering the market.

If this trend continues, the asset's price could face a notable correction.

Further evidence of weakening demand is reflected in the daily active-address (DAA) divergence for Cardano.

The DAA divergence, which measures the relationship between price movements and the number of active addresses, has been negative since September 7.

At present, the reading stands at -43.3%, indicating that the recent rally may have been influenced by broader market conditions rather than a specific surge in demand for ADA.

Currently, Cardano is priced at $0.39, and technical analysis shows that its price is nearing a critical support level indicated by the Ichimoku Cloud.

If ADA fails to hold above this support, the price could drop by 29%, bringing it down to $0.27.

However, should the market experience a shift in sentiment and demand for Cardano increases, the cryptocurrency could rise towards a resistance level of $0.47.

Investors will need to closely watch the market's behavior to assess the next move for Cardano’s price.

At the time of reporting, the Cardano price was $0.3839.