- Cardano’s price has seen a significant drop, with technical indicators suggesting potential support around $0.28 and an oversold RSI hinting at a possible rebound.
- Despite market uncertainty and a decrease in large transactions, there are signs that ADA could rally back to $0.41.
Cardano (ADA) has faced a tumultuous week, with a 25% drop in its price, reflecting broader market uncertainty. As investors seek to understand the future trajectory of ADA, several technical indicators and market dynamics offer insight into what might come next.
Support and Oversold Signals
Amid the downturn, around 537.16 addresses holding 5.58 billion ADA, purchased at approximately $0.22, may act as a buffer against further declines. The Relative Strength Index (RSI) suggests that Cardano has entered the oversold territory, reducing the likelihood of a prolonged correction. This indicator shows that the selling pressure might be nearing exhaustion, potentially paving the way for a recovery.
Expanding Channel Pattern
The daily chart for Cardano reveals a notable correction over the past two weeks, with the price dropping from $0.45 to $0.308, a 31.5% decline. This sharp drop has led to the formation of an expanding channel pattern, indicating market uncertainty. The ADA price fluctuating between two diverging trendlines suggests no clear direction from buyers or sellers. If the market’s broader selling pressure continues, Cardano could break below the lower trendline at $0.28, potentially plummeting another 15% to find support at $0.24.
Market Metrics and Investor Sentiment
The Global In/Out of the Money (GIOM) metric paints a grim picture for Cardano. Currently, 28.1 billion ADA tokens are ‘out of the money’ (bought at higher prices and now at a loss), compared to only 5.7 billion tokens ‘in the money’ (bought at lower prices and profitable). This imbalance highlights a less stable investor base, raising the risk of panic selling.
Adding to the bearish sentiment, the number of large transactions has plummeted from 6.5k to 3.02k since early July, marking a 56% decline. This decrease in high-volume trades could signal waning interest from major investors or a shift towards a more cautious market approach.
Potential for Recovery
Despite the bleak outlook, there are signs of hope. Cardano currently trades at $0.309 and seeks support at the lower trendline, which previously triggered a 45% rally. A long-wick rejection candle today indicates demand pressure, suggesting potential support for bottom formation. The daily RSI has dropped to an oversold position at 26%, which might attract dip buyers and set the stage for a 30% rally to $0.41.
Cardano’s recent price decline has created a precarious situation for investors. While technical indicators show potential for a rebound, broader market conditions and investor sentiment will play crucial roles in determining the next move. For now, all eyes are on whether ADA can hold its current support levels and spark a recovery.
