Cardano, once on a bullish trajectory, has recently experienced a sharp downturn. After reaching a peak of $1.3 a week ago, the cryptocurrency has plummeted to a low of $0.911. As of writing, ADA is trading at $1.02, marking a 12.25% daily decline.
A Look at the Market Sentiment
Crypto analyst Ali Martinez believes that $1.2 is a crucial support level for Cardano. If ADA breaks below this level, it could potentially drop to $1. However, Martinez draws a parallel between ADA’s current situation and its 2020 cycle. During that time, Cardano experienced a significant rally from $0.141 to $1.547. This historical precedent suggests that the recent dip could present a buying opportunity, potentially leading to a recovery and pushing ADA towards the $4 to $6 range.
Technical Analysis: A Bearish Outlook
A closer look at ADA’s technical indicators paints a bearish picture. AMBCrypto’s analysis reveals a shift in market sentiment from bullish to bearish, with sellers dominating the market. This is evident in the decline of ADA’s Relative Strength Index (RSI) from 79 to 53, indicating increased selling pressure.
Furthermore, a decrease in active addresses from 170.83k to 90.36k signals reduced network usage, adoption, and investor interest. The spike in the NVT ratio, from 11.63 to 54.03, suggests that ADA’s market cap is outpacing its transaction volume. Historically, high NVT ratios are associated with market tops or overbought conditions.
The growing number of short positions, as indicated by Coinglass’s long/short ratio, further reinforces the bearish sentiment. With short-position holders accounting for 52% of the total, it’s clear that many investors are betting on a price decline.
Cardano is currently undergoing a corrective phase and could face further downward pressure. If the bearish sentiment persists, ADA may drop to $0.9 or even $0.77. However, a potential trend reversal could see ADA reclaim the $1.2 level. Investors should closely monitor market developments and technical indicators to make informed decisions.
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.
Also Read: Cardano [ADA] Dips to $1 Amid Market Retreat: Top Analyst Predicts Rally to $4
About The Author
