Cardano’s highly anticipated Chang hard fork is set to go live on September 1st, bringing significant changes to the blockchain platform. Initially planned for an earlier date, the upgrade was postponed after Cardano founder Charles Hoskinson announced on X (formerly Twitter) that several tier-1 centralized exchanges, including Binance, were not ready for the update.
A Major Step Forward for Cardano: Introducing On-Chain Governance
The upcoming hard fork will introduce on-chain governance to the Cardano network for the first time, a move that has generated considerable excitement within the ADA community. However, despite the positive sentiment surrounding the upgrade, many traders are approaching with caution. This wariness has led to a noticeable decrease in trading activity as the upgrade date approaches.
Potential “Sell the News” Event?
An on-chain analysis of ADA’s network activity shows a decline in demand for the cryptocurrency leading up to the upgrade. Data from Santiment reveals that the daily number of addresses participating in ADA transactions has dropped by over 30%, highlighting reduced interest in the altcoin.
Additionally, the negative price-daily active address (DAA) divergence further illustrates the market’s cautious stance. The -15.7% DAA divergence, which compares price movements with changes in daily active addresses, indicates a weakening market and potential for further price declines. This cautious behavior suggests that many traders fear a “sell the news” event, where traders might buy in anticipation of a price rise due to the upgrade but quickly sell off afterward, leading to a price drop.
Futures Markets Show Optimism Despite Cautious Trading
Interestingly, while spot markets show signs of caution, the futures markets do not appear as concerned. The funding rate, currently at 0.0084%, suggests a higher interest in long positions, indicating that some traders remain optimistic about ADA’s price trajectory post-upgrade.
Possible Price Outcomes for ADA Post-Upgrade
The implementation of the Chang hard fork could result in two distinct price scenarios for ADA. If the upgrade triggers a wave of sell-offs, ADA’s price could potentially drop to $0.027. Alternatively, if the upgrade fosters positive market sentiment and investor confidence, ADA could see a significant price increase, potentially reaching $0.39 or even surpassing the $0.40 mark, aligning with Cardano’s growth ambitions.
Market Sentiment Leans Towards Fear
Market sentiment is a crucial indicator of investor behavior, and currently, it has shifted towards a more negative outlook. The Fear & Greed Index, a tool used to gauge overall market sentiment, has moved out of the “Greed” zone and into “Fear” territory, losing over 27 points in the past week. This shift suggests that investors are more inclined to sell their holdings rather than buy, reflecting heightened anxiety about potential price drops following the hard fork.
Conclusion
As Cardano’s Chang hard fork approaches, the market remains on edge, with traders carefully weighing the risks and rewards of holding ADA through the upgrade. While some remain hopeful for a bullish outcome, the prevailing caution could set the stage for a “sell the news” event. As the upgrade date nears, all eyes will be on ADA’s price movements and how the market reacts to this pivotal moment in Cardano’s development.