Cardano Price Faces 22% Drop Risk as On-Chain Activity Declines
Cardano price continues to struggle in the volatile crypto market as heavy sell pressure weighs it down. On-chain metrics do not support a bullish outlook for the asset, further exacerbating the situation. Nevertheless, some good news just hit the market about ADA and some of its counterparts regarding regulatory clarity from the U.S. Securities and Exchanges Commission (SEC)—the Cardano (ADA) token is no longer considered a security.
Cardano Price Searches for Support
The price of ADA dropped 0.6% in the last 24 hours to trade at $0.399 during U.S. market hours on Wednesday. The ADA chart shows a gaping sell-off risk if market conditions don’t change soon.
ADA price appears to be trending downward due to a series of lower highs and lower lows, as well as the price trading below both the 50-day (green line) and 200-day (black line) exponential moving averages (EMA).
The primary support level for Cardano price is around $0.30, as indicated by the lower boundary of the descending channel and historical price action. If bears prevail, Cardano price may drop 22% to find further support at the yearly low of $0.3165. Conversely, the immediate resistance level is near $0.42, aligned with the 50-day EMA. A stronger resistance exists at $0.50, where the 200-day EMA and previous highs converge.
The Relative Strength Index (RSI) is at 45.63, indicating a neutral stance but leaning towards the oversold territory. This suggests a potential for further downside before any reversal. Furthermore, the Chaikin Money Flow (CMF) at -0.07 indicates negative money flow and stronger selling pressure than buying pressure.
The ADA daily trading volume significantly decreased, suggesting a reduced buying interest at the current levels. This typically precedes a continuation of the bearish current trend.
ADA’s On-chain Metrics Support Bearish Trend
According to Santiment data, Cardano’s on-chain volume has been dwindling since March and hit its lowest in July. Over the last 24 hours, Cardano’s on-chain volume was a little over $1.5 billion, comparatively lower than March’s $11.5 billion.
According to data from Coinalyze, ADA open interest slightly increased by 1.81% in the last 24 hours, suggesting little capital inflow into ADA. Additionally, the daily funding rate increased from 0.006 to 0.0132 in the last 24 hours. Nevertheless, the funding rate is predicted to drop to 0.0106 tomorrow.
Despite the unpleasant network activity, ADA was among the tokens recently classified by the SEC as security. However, the regulatory agency has retracted its decision, changing its stance on the crypto asset in its case against Binance. Could this be setting up the crypto space for more ETF approvals?
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