Cardano (ADA) price risks undergoing a severe correction in the next few months despite touting its blockchain network's bolstering growth and a "major" hard fork event in June.
Descending channel hints at ADA selloff ahead
ADA, which makes up about 1.75% of the total crypto market capitalization, has been trending lower since September 2021, inside a "descending channel" pattern that has successfully capped its multiple upside attempts, as illustrated in the chart below.
ADA/USD daily price chart featuring descending channel setup. Source: TradingView
The channel showed further strength as ADA broke above its upper trendline on March 27, only to reverse entirely in later sessions, showing a lack of conviction among the Cardano bulls.
ADA's 200-day exponential moving average (200-day EMA; the blue wave), alongside the 0.236 Fib line (near $1.29) of the Fibonacci retracement graph, drawn from $2.96-swing high to $0.78-swing low, further aided the bearish bias.
As of April 15, ADA's price consolidates inside the $0.97-$0.92 range, signaling intentions to continue its pullback from its fakeout top near $1.25.
If the descending channel setup continues panning out, ADA/USD could fall to its previous bottom range near $0.78 while eyeing the channel's lower trendline around $0.65 as its primary downside target.
ADA/USD daily price chart. Source: TradingView
That amounts to an almost 30% drop from today's price.
Cardano network growth fails to impress traders
Meanwhile, Input Output Hong Kong (IOHK), the research and development firm behind the Cardano project, has announced incredible network growth entering April 2022.
IOHK also appears to be readying the "Vasil" hard fork, a network upgrade to make Cardano's blockchain more scalable, sometime in June.
Cardano founder Charles Hoskinson stressed the word "major" five times when describing the fork's importance to the overall network growth in a video released April 12, a day after ADA crashed more than 10%.
Yes, ADA's price recovered after Hoskinson's address and IOHK's tweets. But the rebound lost momentum and is trending sideways, remaining under the influence of macro factors.
The daily correlation coefficient between ADA/USD and NDX. Source: TradingView
Notably, like Bitcoin, ADA's correlation with the Nasdaq-100 (NDX) rose to a record level, hitting 0.97 on April 15 versus.0.79 at the beginning of the year.
In other words, ADA price is currently in lockstep with the tech-heavy index, which has erased more than $1 trillion from its market cap in April.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Crypto Today: Bitcoin crumbles under German government transfers, Ethereum and Ripple erase gains
Bitcoin trades below $57,100 on Thursday as German government transfers continue, $76 million BTC moved to exchanges. Ethereum trades near $3,100 ahead of the upcoming SEC decision on the Spot Ethereum ETF.
Ripple traders take over $75 million in losses in July, XRP drops below key support
Ripple (XRP) price is under fresh selling pressure and tests key support at the June 7 low of $0.4508 on Thursday as whales are likely capitulating, according to on-chain data.
Bitcoin price declines as supply on exchanges rises
Bitcoin faced rejection at the daily resistance level of $63,956 on Monday, resulting in a 4.2% decline over the next two days. BTC’s price extends its downward move and falls below $58,000 on Thursday, adding more than 4% losses in the day.
Worldcoin is poised for 17% rally as as technical indicators signal bullish momentum
Worldcoin price finds support and bounces 9% from the weekly support level around $2.183. Technical analysis shows that WLD has formed a bullish divergence on a momentum indicator.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.