As a seasoned analyst with over two decades of market observation under my belt, I’ve seen bull runs and bear markets come and go. The current state of Cardano (ADA) is reminiscent of a rollercoaster ride that’s taking a downturn.
Traders are feeling anxious due to the overall downturn in cryptocurrency values, especially with top altcoins such as ADA experiencing a prolonged slump and showing few signs of immediate recovery. The price of Cardano, for instance, shows a weaker technical pattern compared to its performance in the first quarter when it reached its annual high of $0.81.
Similar to Bitcoin and Ethereum, Cardano encounters external political pressures and decreasing optimism. The possibility of multiple interest rate reductions in 2024 becomes slimmer as concerns about a potential US recession grow.
Low Network Activity Predicts Further Cardano Price Decline
Over the past two months, there’s been a significant decline in the number of new participants joining the network, which could potentially exacerbate the strain on Cardano (ADA). Data from IntoTheBlock indicates a drop of 48% in unique addresses, decreasing from 14,700 to 7,650 between early June and early August.
Typically, reduced network activity suggests a possible drop in demand, causing ADA‘s price momentum to wane during recovery attempts. The data from IntoTheBlock reveals a similar pattern in the total number of addresses, which currently stands at approximately 4.45 million, a decrease from 4.46 million in February.
In simpler terms, the current technical setup during the day suggests vulnerability. Bulls anticipate a challenging fight ahead, considering that most indicators point towards a possible prolonged decline near the $0.35 support level.
In simpler terms, several indicators are signaling that it might be advantageous for traders to sell Cardano (ADA), as suggested by the Moving Average Convergence Divergence (MACD) and a recent death cross configuration.
When a shorter moving average (in this case, the 20-day Exponential Moving Average) drops beneath a longer one (the 50-day Exponential Moving Average), it suggests a potential downward trend for ADA in the near future. This phenomenon, known as a “death cross,” can increase the likelihood of a mid-term bearish market scenario.
1. The price of Cardano is currently below all three moving averages, including the 200-day EMA at approximately $0.4572, which acts as a barrier for further growth. If bulls cannot hold the $0.35 support level, there’s a risk that this technical structure will weaken, causing a steep drop in price to around $0.3. This could potentially push Cardano down even further to $0.25.
In simpler terms, if the price of Cardano is around $0.35, bulls might be able to halt its decrease. Furthermore, there’s been a growing trend of bullish daily candles, suggesting a possible breakout from a potential falling wedge formation.
In simpler terms, after Cardano (ADA) dropped from its annual high of $0.81, it created a falling wedge pattern on the daily chart, which is characterized by two lower highs and three lower lows. This pattern has traders expecting a significant price rise that would surpass the upper trend line of the wedge, potentially leading to a 61% increase in value. This projected jump is calculated based on the distance between the first dip (swing low) and peak (swing high) of ADA’s price movement, with this calculation then added to the breakout point from the wedge. Such a move would bring Cardano closer to breaking through the resistance at $0.75.
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2024-08-03 17:27