Cardano (ADA) is currently in a steep seven-day decline, which has been exacerbated by a fresh drop below the $0.41 mark. This decline is part of a broader trend seen across many altcoins, which have reacted negatively for Ethereum significant drop in the last 24 hours.
The drop represents a correction from a bull run that began earlier in the month, during which ADA holders made good gains. Consequently, this up-and-down movement has created some critical support and resistance levels for ADA, which will be crucial for investors to monitor in the coming days. Market sentiment has shifted considerably, and traders are now focusing on these key levels to assess whether ADA can recover or continue its downward trajectory.
Important Price Levels for ADA
At the time of writing, Cardano is trading at $0.3963 and has corrected 11.6% from a peak of $0.4485 in the past 48 hours. Zooming out to a monthly timeframe shows that the cryptocurrency is only correcting after a strong bull run. During this run, ADA rose from $0.3213 to $0.4545 in a week, representing an impressive increase of 41.5%. However, the $0.45 level acted as a significant resistance point, causing ADA to reverse and enter a consolidation phase between $0.45 and $0.40, which was followed by a recent break below the support.
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According to a technical analysis According to a crypto analyst, this consolidation move has created a pattern similar to a small bull flag, and a break above $0.45 to the upside could push ADA towards $0.6. This suggests that ADA could soon reclaim a support level and resume its uptrend.
On the other hand, ADA price movement analysis suggests that a break to the downside could push it towards a final support level of $0.32 and erase all the gains made earlier in the month. However, this is less likely to happen in the short term as ADA now finds itself hovering around the $0.40 price level.
What’s next for Cardano?
According to According to blockchain analytics firm Santiment, Cardano (ADA) is one of three cryptocurrencies with significantly negative funding rates on major exchanges. However, Santiment suggests that this may not be entirely detrimental. Strongly negative funding rates indicate a high probability of a price surge due to the potential liquidation of short positions.
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Over the past five weeks, Cardano has been consistently short on exchanges. Should these short positions be liquidated, even for a small price increase, it could trigger a substantial price increase. This liquidation could act as a catalyst, propelling the value of ADA for a prolonged increase above $0.6. A potential catalyst for a price increase could be the highly anticipated Chang Hard Fork Update for the Cardano blockchain.
Featured image created with Dall.E, chart from Tradingview.com