Cardano (ADA) is currently in a pronounced seven-day decline, which was exacerbated by a fresh descent below the $0.41 mark. This decline is an element of a broader trend observed across many altcoins, which have reacted negatively to Ethereum’s significant drop within the last 24 hours.
The decline represents a correction from a bullish run that began earlier within the month, during which ADA holders saw good gains. Consequently, this up-and-down movement has created some critical support and resistance levels for ADA, which might be crucial for investors to observe in the approaching days. The market sentiment has shifted considerably, and traders at the moment are specializing in these key levels to gauge whether ADA might rebound or proceed its downward trajectory.
Necessary Price Levels For ADA
On the time of writing, Cardano is trading at $0.3963 and has corrected by 11.6% from a peak of $0.4485 up to now 48 hours. Zooming out on a monthly timeframe shows that the cryptocurrency is merely correcting after a powerful bullish run. During this run, ADA surged from $0.3213 to $0.4545 inside every week, representing a powerful increase of 41.5%. Nevertheless, the $0.45 level acted as a major resistance point, causing ADA to reverse and enter a consolidation phase between $0.45 and $0.40, which was followed by a recent breakdown below the support.
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In response to a technical evaluation by a crypto analyst, this consolidation movement created a pattern much like a small bullish flag, and a breakout above $0.45 to the upside could push ADA to $0.6. This means that ADA could soon bounce back up on a support level and resume its uptrend.
However, analyzing ADA’s price movement suggests a break to the downside could push it to as little as a final key support level at $0.32 and cancel all the gains it made earlier within the month. Nevertheless, that is less more likely to occur within the short term, as ADA now finds itself hovering across the $0.40 price level.
What’s Next For Cardano?
In response to blockchain analytics firm Santiment, Cardano (ADA) is one among three cryptocurrencies with significantly negative funding rates on major exchanges. Nevertheless, Santiment suggests that this may increasingly not be entirely detrimental. The heavily negative funding rates indicate a high probability of a price boost from the potential liquidation of short positions.
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Over the past five weeks, Cardano has been consistently shorted on exchanges. Should these shorts be liquidated by even a minor price increase, it could trigger a considerable price surge. This liquidation could act as a catalyst, propelling ADA’s value on an prolonged surge above $0.6. A possible catalyst for a price increase could possibly be the highly anticipated Chang Hard Fork upgrade to the Cardano blockchain.
ADA price drops sharply | Source: ADAUSDT on Tradingview.com
Featured image created with Dall.E, chart from Tradingview.com