Cardano (ADA) has been facing a noticeable decrease in value over the past week, especially with the recent drop below the $0.41 mark. This decline is not isolated to ADA alone, as many other altcoins have also been reacting negatively to the significant decrease in Ethereum’s price within the last 24 hours. The recent downtrend can be seen as a correction following a bullish period that started earlier this month, resulting in substantial gains for ADA holders. As a result, new support and resistance levels have been established for ADA, which are crucial for investors to keep an eye on in the days ahead.
At the time of writing, Cardano is currently being traded at $0.3963, marking an 11.6% correction from its recent peak of $0.4485 in the last 48 hours. Looking back at the monthly timeframe, it is evident that ADA was undergoing a correction after a significant bullish run. From $0.3213, ADA shot up to $0.4545 within a week, showcasing a remarkable increase of 41.5%. However, the $0.45 level served as a strong resistance point, leading to ADA retracting and entering a consolidation phase within the range of $0.45 and $0.40, ultimately resulting in a breakdown below the support level.
Analyzing ADA’s price movement further, it becomes apparent that a breakout above $0.45 could potentially push ADA’s price to $0.6, indicating a bullish continuation. Conversely, a downside break could drive ADA to a critical support level at $0.32, wiping out the gains from the previous month. Despite the possibility of such a scenario, given ADA’s current position around the $0.40 mark, a significant drop to $0.32 in the short term seems less likely.
According to Santiment, a blockchain analytics firm, Cardano (ADA) is among three cryptocurrencies with notably negative funding rates on major exchanges. However, this negative sentiment may not necessarily be disadvantageous. The high levels of short positions on ADA suggest a potential for a price increase through the liquidation of these positions. If these shorts are closed out due to even a minor price uptick, it could trigger a substantial surge in ADA’s value.
Over the past five weeks, Cardano has consistently been targeted for short selling on exchanges, indicating a buildup of negative sentiment towards the cryptocurrency. However, the liquidation of these short positions could serve as a catalyst for ADA’s value to appreciate further, potentially surpassing the $0.6 mark in an extended surge. One plausible factor that could drive this price appreciation is the upcoming Chang Hard Fork upgrade to the Cardano blockchain, which is highly anticipated within the crypto community.
While Cardano (ADA) has been experiencing a recent decline in price, there are positive indicators that suggest a potential rebound in the near future. By closely monitoring the established support and resistance levels, as well as keeping an eye on market sentiment and upcoming developments such as the Chang Hard Fork, investors can make informed decisions regarding their ADA holdings.