Cardano (ADA) Expected to Recover Following Recent Price Dip
Cardano (ADA) cryptocurrency experienced a significant decline recently, losing almost 30% of its value, which marked its worst performance in a week since May 2021. The decline followed the collapse of the Terra blockchain that sparked a crypto market crash. However, technical analysis suggests that ADA is set to undergo a sharp recovery in the coming months. This article examines the reasons behind the decline and analyzes ADA’s technicals to provide insight into the potential rebound.
Reasons Behind Cardano’s Bad Week
The decline in ADA’s price was caused by several factors, including the U.S. SEC’s decision to deem it an unregistered security in lawsuits filed against Binance and Coinbase. Furthermore, Robinhood announced that it would delist ADA from its platform, leading to a max 30% drop in ADA’s price on that day.
Also, Crypto.com terminated the services it offered to its U.S.-based institutional clients, thereby restricting ADA’s potential mainstream investor base in the U.S. Further, the SEC’s crackdown on cryptocurrencies has created unfavorable market conditions in the United States for digital tokens such as ADA.
ADA’s Technicals Suggest a Possible Rebound is Coming
Despite the decline, ADA’s technicals indicate a possible rebound ahead. For instance, the ongoing token recovery comes a day after its daily relative strength dropped to 20, the most oversold since March 2020. Oversold RSI readings typically precede consolidating or recovering price movements. For instance, the ADA price had jumped 900% four months after March 2020’s oversold readings, which happened due to the Federal Reserve’s quantitative easing policy that boosted sentiment across the riskier markets.
On the three-day chart, ADA appears range-bound inside the $0.247-0.382 area, similar to its price movements in January 2021 and January 2023. Therefore, a rebound from the $0.247-support may start an uptrend toward $0.382 by October 2023. Conversely, a decisive close below the $0.247-support gives bears more fuel to pull the price towards $0.19, down about 30%, by October 2023, a resistance-turned-support level from July 2020-December 2020 session. The $0.382-resistance, coinciding with the 200-3D EMA (the red wave), is up 40% from current levels.
Although Cardano experienced a significant decline, the technicals suggest that investors should expect a possible rebound ahead. The decline in price was caused by several factors, including Robinhood’s announcement that it would delist ADA from its platform, and the SEC’s crackdown on cryptocurrencies. However, with the oversold RSI readings and ADA’s price range-bound patterns, there is optimism that a price correction will occur. Investors should conduct their research and due diligence before making any investment or trading decisions.
Nigeria Regulator Halts Binance Operations: Report
It is worth noting that this article does not provide any investment advice or recommendations. Every investment and trading comes with its share of risk; therefore, readers should conduct their independent research to make informed decisions.