Cardano (ADA) has been experiencing a significant seven-day decline, leading to a fresh descent below the $0.41 mark. This decline can be attributed to a broader trend seen across many altcoins, triggered by Ethereum’s recent drop. The correction is a result of a bullish run earlier in the month that generated favorable gains for ADA holders.
Support and Resistance Levels
The up-and-down movement of ADA has established critical support and resistance levels that investors need to monitor closely. A shift in market sentiment has ensued, with traders now keeping a keen eye on these key levels to determine whether ADA will bounce back or continue on its downward trajectory.
As of now, Cardano is trading at $0.3963, having corrected by 11.6% from its peak of $0.4485 within the past 48 hours. Looking at the monthly timeframe, ADA appears to be undergoing a correction phase following a strong bullish run. ADA surged from $0.3213 to $0.4545 in just a week, showing a remarkable increase of 41.5%. However, the $0.45 level acted as a major resistance point, leading to a reversal and a consolidation phase between $0.45 and $0.40, followed by a recent breakdown below the support level.
Technical Analysis Predictions
A crypto analyst pointed out that the consolidation movement formed a pattern resembling a small bullish flag. A breakout above $0.45 could potentially propel ADA to $0.6, indicating a possible upward trend in the near future. Conversely, a downside break could push ADA to a key support level at $0.32, potentially nullifying all previous gains made earlier in the month. Currently, ADA is hovering around the $0.40 price level, presenting a crucial juncture for its price movement.
According to blockchain analytics firm Santiment, Cardano has been among the cryptocurrencies with significantly negative funding rates on major exchanges. Despite this, Santiment suggests that the situation might not be entirely disadvantageous. The heavily negative funding rates signal a high likelihood of a price boost resulting from the potential liquidation of short positions.
Potential Price Catalysts
Over the past five weeks, ADA has been consistently shorted on exchanges. If these short positions are liquidated with even a slight price increase, it could trigger a substantial surge in ADA’s value. This liquidation process might act as a catalyst, propelling ADA’s price towards an extended surge above $0.6. The highly anticipated Chang Hard Fork upgrade to the Cardano blockchain could potentially serve as a catalyst for a price upsurge in the near future.
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