Back in 2019, Cardano experienced a significant drop of 57% following a rate cut by the Federal Reserve. The rates at that time were much lower compared to the current levels, with a public debt of $22 trillion. Fast forward to today, the debt has increased to nearly $35 trillion, and interest rates are now more than double the 2019 levels at 5.33%. This is a cause for concern as a similar setup to 2019 could potentially bring major downside for Cardano.
Given the historical correlation between rate cuts and crypto declines, it is possible for Cardano to undergo a multi-month decline following an upcoming rate cut by the Federal Reserve. If the market follows the 2019 pattern, Cardano could face a prolonged downtrend that may last until the end of the year, before potentially recovering in early 2025. This could potentially push Cardano’s price down to around $0.15, representing a significant drop from its current levels.
September has historically been a tough month for both stocks and crypto, with Cardano facing a downtrend in 2020 during a halving year. The current 10% drop since the beginning of September could further exacerbate the situation, potentially driving Cardano towards a deeper fall below its 2022 support line at $0.2349. Traders focusing on short-term movements need to be wary of these challenges and consider the bigger picture.
Looking at the monthly Stochastic RSI and MACD indicators for Cardano, there are clear warning signs that suggest a rough road ahead. The Stochastic RSI has been sliding since March 2024, nearing oversold conditions below 20. The MACD has also shown bearish vibes, crossing below the signal line and displaying a growing bearish momentum on the histogram. Additionally, the Visible Range Volume Profile highlights weak support levels for Cardano within the current price range.
Despite the bearish indicators, there are a few factors that could prevent Cardano from experiencing a sharp decline. The macro Fibonacci golden pocket between $0.2951 and $0.3204 has acted as a support zone for now. However, falling below the 78.6% retracement on multiple Fibonacci levels raises doubts about the long-term strength of this golden pocket. A stronger support level lies at $0.2349, which was respected during the 2022 bear market.
In light of the upcoming Federal Reserve meeting, there could be a dead cat bounce for Cardano before facing a 2-3 month downtrend. A more cautious approach would be to wait for Cardano to drop below the $0.2951 golden pocket before considering shorting. This provides a safer entry point compared to shorting immediately, as there might be a short-term uptrend above the golden pocket. Ultimately, investors need to carefully evaluate the potential risks and rewards before making any investment decisions.
It is important to note that this article does not constitute investment advice. The content presented here is for educational purposes only, and readers are encouraged to conduct their own research and seek professional financial advice before making any investment decisions.