Amid an ongoing correction in the cryptocurrency market, Cardano (ADA) appears to be at a critical juncture, with its price chart signaling a potential major decline. Other key cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), and Solana (SOL), are also facing similar pressures, leading to widespread caution among investors.
Bearish Pattern On ADA’s Daily Chart
According to technical analysis from AMBCrypto, Cardano has formed a bearish pin bar candlestick pattern on its daily chart, a signal that typically precedes a downward move. The pattern emerged as ADA approached resistance at the descending trendline, an area where it has faced selling pressure multiple times since April 2024. Each time ADA reached this resistance level, a sell-off followed, and the current situation appears to be no different.
The bearish pattern suggests that if ADA closes below the crucial $0.3912 level, it could face a sharp decline of up to 20%, with prices potentially falling to $0.31 in the near future. However, this scenario is contingent on ADA remaining below the $0.42 resistance level. Should ADA break through this level, the bearish outlook could be invalidated.
On-Chain Metrics Support Bearish Sentiment
Adding to the negative outlook, on-chain data reinforces the bearish case for ADA. According to Coinglass, ADA’s Long/Short Ratio stood at 0.93 at the time of analysis, indicating a predominance of short positions among traders. This suggests that market participants are betting on further price declines.
Additionally, ADA’s Futures Open Interest, a measure of the total number of outstanding futures contracts, has shown little change in the past 24 hours, indicating neutral interest from traders. However, the fact that 51.63% of top traders are holding short positions compared to 48.37% long positions highlights the dominance of bearish sentiment.
Declining Trading Volume Signals Waning Interest
At the time of writing, ADA was trading around $0.385, reflecting a 1.4% decline over the past 24 hours. Notably, ADA’s trading volume has also dropped by 35%, signaling reduced participation from traders. This drop in activity further underscores the bearish mood prevailing in the market.
The reduced volume and overwhelming short positions suggest that traders are stepping back, likely waiting for more significant price movements before re-entering the market. Should the current bearish trend continue, ADA could face further downside in the coming days.
Also Read: ADA Breakout – Cardano Overcomes Key Resistance, Eyes $0.665 Target After 200% Surge!
What’s Next for ADA?
For now, the future of ADA hinges on whether it can maintain support above $0.3912. If it fails to do so, traders may see the price tumble to $0.31, marking a 20% decline. However, should ADA manage to break above $0.42, it could signal a shift in momentum, potentially invalidating the bearish thesis.
As the broader cryptocurrency market grapples with its correction, ADA remains a key asset to watch, with traders closely monitoring both its price action and on-chain data for further cues. The coming days will likely determine whether ADA can overcome its bearish setup or if it will succumb to further losses.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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