On-chain data shows Cardano is currently retesting a major resistance wall, breaking through which might pave the way to higher price levels.
Cardano Is Facing On-Chain Resistance At Current Price Levels
According to data from the market intelligence platform IntoTheBlock, there appears to be key on-chain resistance around the $0.38 mark. In on-chain analysis, levels are judged to be “resistance” or “support” based on whether they host the cost basis of a significant number of investors or not.
The cost basis here naturally refers to the price at which a Cardano investor bought their tokens. This price is obviously an important level for any holder, as the asset’s spot value retesting this level could mean a potential swing in their profit-loss situation.
Because of this reason, holders are particularly sensitive when such a retest happens and as such, they may be more likely to show some kind of move. What kind of move this would be, though, depends on the prior profit-loss situation of the investor.
Investor psychologically works so that if the trader had been holding a profit before this retest, they might want to take a further gamble at it, as they could believe this same price level would be profitable again in the future.
Similarly, the holder might lean towards selling instead if the retest is happening from below since they would fear a scenario where the price declines again and they dip back into losses.
Now, here is what the various Cardano price ranges are looking like right now in terms of the concentration of investors or addresses who acquired their coins at them:
Looks like the current price range is offering a significant amount of impedance to the price | Source: IntoTheBlock on X
In the above graph, the size of the dot represents the amount of investors who bought inside the range. As mentioned before, investors are likely to show some reaction when the price retests their cost basis, so if a large number of them share their cost basis inside the same range, the effect that the market would feel from the retest would also be equally sizeable.
From the chart, it’s visible that the ADA price range between about $0.37 and $0.39 has a cost basis of over 319,000 addresses, which acquired a total of 7.19 billion ADA at these levels.
This is the same range that Cardano has been retesting recently and has been struggling to break out of. It would appear that the reason behind this might be the resistance being offered by the sellers who are attempting to exit at their break-even prices.
Given the large scale of this resistance wall, it would be tough for the cryptocurrency to mow through it and gain some distance. If the asset can achieve this, though, then the zone might turn into support instead and provide some solid ground for a move towards higher levels.
ADA Price
Cardano is trading around the $0.38 level right now, which is right in the middle of the resistance wall.
The value of the asset appears to have been moving sideways in the last few days | Source: ADAUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, IntoTheBlock.com