Crypto exchange Kraken stated that the current price action according to Cardano’s (ADA) daily trading could be a bullish indicator for the sixth-largest cryptocurrency by market cap.
Kraken says in a new report that although the price of ADA is strongly correlated with the volume of network activity, this has not been the case since late 2021, when Cardano’s price failed to keep up with the increase in its day-to-day transactions.
“Throughout 2020 and 2021, there was a strong correlation between ADA price action and daily transactions. This relationship continued until November 2021, when we saw the price of ADA drop while daily trading saw a slight increase.”
Kraken says there is a “buy the hype, sell the news”* pattern that characterizes the market activity that led to Cardano’s updates, but the current correlation between ADA’s price and trading volume indicates diminishing hype on the network .
The exchange says that ADA is going through a correction phase and is still on the path to growth as decentralized applications (DApps) are launched on the network.
“This could be a bullish indication for ADA that the asset is in a correction cycle due to the drop in hype rather than the exit of the network. This is particularly important to consider as the long-awaited launch of DApps on the network begins to roll out.”
At the time of writing, ADA was trading at $1.07.
*Buy the hype, sell the news
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