Cardano (ADA) and Avalanche (AVAX), two popular altcoins, are experiencing notable corrections this week, with prices continuing to trend downward on Wednesday. Cardano has corrected by nearly 7%, while Avalanche is down over 8% since the beginning of the week. As both altcoins face resistance from technical indicators and shifting market sentiment, they are poised for potential further declines, possibly entering double-digit corrections.

Cardano’s Struggles: Bulls Show Signs of Exhaustion

Cardano’s price action over the past month has been a story of extreme volatility. After a remarkable rally of over 250% from early November, ADA reached a high of $1.30 in the first week of December. However, this upward momentum faced rejection at the 50% retracement level, based on the price movement from the November 2021 high of $2.37 to the December 2022 low of $0.23. Since this peak, Cardano has seen a steep decline, shedding more than 20% of its value, and is currently trading around $1.02.

The bearish outlook for ADA is further confirmed by the technical indicators. The Relative Strength Index (RSI) on the weekly chart has entered overbought territory and is now showing signs of downward momentum. If the RSI drops below the 70-mark, which signifies overbought conditions, it would signal a weakening of bullish sentiment and could set the stage for a deeper correction.

Looking ahead, if the downtrend persists, Cardano could experience further declines, potentially testing its next support level around $0.74. This would represent a drop of about 25% from its current price, reinforcing the bearish sentiment surrounding ADA.

Additionally, market sentiment appears to be shifting in favor of the bears. Coinglass data shows that Cardano’s long-to-short ratio stands at 0.82, the lowest level in a month. A ratio below 1 indicates that more traders are betting on ADA’s price to fall, which could signal that a prolonged correction is underway.

Avalanche Faces Resistance: Bearish Momentum Building

Avalanche (AVAX) is also experiencing a pullback after a significant rally in early November. The price of AVAX surged by over 120% before encountering resistance at the $55.76 level in the first week of December. Since then, the price has dropped by more than 15%, with AVAX trading at approximately $46.40 as of Wednesday.

The technical indicators for Avalanche are signaling continued weakness in its price action. The RSI on the weekly chart, which had previously surged into overbought territory above 70, is now pointing downward. With the RSI reading 62 and trending lower, it suggests that the bullish momentum has fizzled out, and AVAX could continue to lose value in the coming days.

If the price of AVAX continues to correct, it could potentially fall by an additional 12%, bringing it closer to its next support level around $40.55. A drop to this level would represent a further erosion of value, amplifying the bearish outlook for Avalanche.

Avalanche’s long-to-short ratio, similar to Cardano’s, stands at 0.80, also indicating a shift toward bearish sentiment. This figure suggests that more traders are betting against the asset, further supporting the possibility of a continued pullback.

What’s Next for Cardano and Avalanche?

Both Cardano and Avalanche are facing similar challenges in the market, with bearish technical indicators and market sentiment signaling further downside potential. As both altcoins continue to trade below their recent highs, the risk of deeper corrections looms large.

For ADA, a drop to $0.74 would mark a significant 25% correction, while AVAX could see a decline of up to 12% if it tests its next support at $40.55. The long-to-short ratios for both altcoins suggest that more traders are positioning themselves for price declines, indicating that the market sentiment is firmly tilted toward the bearish side.

As we move further into December, the fate of both Cardano and Avalanche will depend on how the broader market reacts. If bearish sentiment continues to dominate, both ADA and AVAX could face more significant corrections in the weeks ahead, potentially leading to double-digit declines. However, if the market finds support and bullish momentum returns, these altcoins could see a reversal in their fortunes.