Cardano (ADA) has been experiencing a significant decline in the past seven days, dropping below the $0.41 mark. This drop is part of a broader trend seen across the altcoin market, which has been reacting negatively to the recent downturn in Ethereum. The downward movement is considered a correction from a bullish run that started earlier in the month, resulting in substantial gains for ADA holders. This fluctuation has established crucial support and resistance levels for ADA, which will be essential for investors to track in the upcoming days.
Currently, Cardano is trading at $0.3963, marking an 11.6% correction from its recent peak of $0.4485 within the past 48 hours. Looking at the monthly timeframe, ADA has been correcting after a strong bullish surge from $0.3213 to $0.4545, representing a remarkable 41.5% increase. However, the $0.45 level has proven to be a significant resistance point, leading to a consolidation phase between $0.45 and $0.40 before breaking below the support level.
A detailed technical analysis suggests that ADA’s consolidation pattern resembles a small bullish flag, indicating a potential breakout above $0.45. If this happens, ADA could see a surge towards $0.6 in the near future. Conversely, a downside break could push ADA towards the final key support level at $0.32, erasing all the gains made earlier in the month. However, the current price hovering around $0.40 makes an immediate drop to $0.32 less likely in the short term.
According to blockchain analytics firm Santiment, Cardano is among the top three cryptocurrencies with significantly negative funding rates on major exchanges. While this might seem detrimental initially, Santiment believes that these negative rates could actually benefit ADA. The high probability of liquidation of short positions due to the negative funding rates could lead to a price boost for ADA. If these shorts are liquidated with even a minor price increase, it could trigger a substantial surge in ADA’s value, potentially pushing it beyond $0.6. One potential catalyst for such a price increase could be the upcoming Chang Hard Fork upgrade to the Cardano blockchain.
Cardano’s current correction phase provides investors with key support and resistance levels to monitor. Technical indicators point towards a potential breakout towards $0.6, while also highlighting the risk of a drop to $0.32 if the support level is breached. The negative funding rates on major exchanges could act as a catalyst for a price surge if short positions are liquidated. Overall, ADA’s future outlook remains uncertain but with the potential for significant price movements in the near future. Investors should consider these factors and stay informed about any developments in the Cardano ecosystem.
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