Home Altcoins News Cardano Faces Extended Bear Market: Will ADA Fall to New Lows

Cardano Faces Extended Bear Market: Will ADA Fall to New Lows

Cardano analysis

Cardano (ADA) continues to face challenges in the crypto market, with ongoing bearish trends pointing to potential price drops. Despite brief periods of stability, ADA has been unable to gain significant upward momentum, and recent technical patterns suggest that it could be heading for further losses.

In the past week, ADA has barely gained 0.4%, underperforming against major cryptocurrencies like Bitcoin (BTC). At the time of writing, ADA is hovering around $0.347, with prices moving within a narrow range between $0.339 and $0.35. The price has been consolidating, which often signals indecision in the market. However, a concerning technical pattern has emerged, suggesting that Cardano’s bear market may continue, pushing the price to new lows.

Double-Top Pattern: A Signal for Caution

A key technical indicator that has appeared on ADA’s daily chart is the double-top pattern. This pattern is often associated with a reversal in price trends, signaling that the asset may face further downward pressure. For ADA, the neckline of this pattern sits at $0.339, a critical support level. If Cardano’s price falls below this, the next likely target is $0.319, signaling a deeper decline.

To break out of this bearish pattern, ADA would need a strong upward move, pushing it above $0.37. Unfortunately, the buying pressure needed to drive such a recovery seems absent at the moment, leaving ADA vulnerable to further losses.

Market Indicators Point to Continued Selling Pressure

Several market indicators also suggest that ADA could face ongoing downward pressure. The Relative Strength Index (RSI), which measures the strength of price movements, currently sits at 46. This level indicates that sellers are in control, and with the RSI pointing downward, there’s a risk that selling pressure could increase in the coming days.

Additionally, the Chaikin Money Flow (CMF), an indicator that tracks the flow of capital into and out of an asset, remains negative. This negative reading implies that more investors are selling ADA than buying, further reinforcing the bearish outlook.

Spot Inflows Suggest Traders Are Preparing to Sell

Recent data from the cryptocurrency analytics platform Coinglass reveals that ADA traders are moving their holdings onto exchanges, likely in preparation to sell. Spot inflows—representing the amount of ADA moving to exchanges—recently surged to $4.28 million, the highest level seen since mid-August. When traders move assets to exchanges in large volumes, it typically signals that they’re preparing to sell rather than hold.

This increase in selling activity could add additional downward pressure on ADA’s price, making it difficult for the cryptocurrency to recover in the short term.

Derivatives Market Sentiment: A Mixed Bag

While the spot market paints a bearish picture, the derivatives market offers a more complex outlook. According to Coinglass, open interest in ADA—an indicator of the number of active futures and options contracts—reached $238 million recently. This is the highest level seen this month, suggesting that interest in ADA trading remains high despite the current bearish sentiment.

However, even though 90% of open positions on Binance are long positions (bets that the price will rise), traders have been facing losses. In the past 24 hours alone, $441,000 worth of long positions were liquidated, meaning traders betting on an ADA price increase lost significant amounts of capital. By contrast, only $16,750 worth of short positions were liquidated, indicating that traders betting against ADA are faring much better.

Whale Activity: Could Large Investors Reverse the Trend?

Despite the overall bearish market sentiment, there is one potential bright spot for Cardano. Recently, whale activity has spiked, with large ADA transactions on the rise. Whales, or large investors, often accumulate assets when they believe the price is poised for a recovery. If this accumulation trend continues, it could provide a lifeline for ADA’s price, preventing it from falling to new lows.

Large investors can have a significant impact on the market due to the sheer volume of their trades. If whales are indeed accumulating ADA, it could indicate that they expect the price to bounce back in the near future.

What’s Next for Cardano?

Cardano finds itself in a precarious situation. The emergence of a double-top pattern, combined with increasing selling pressure and bearish market indicators, suggests that ADA could be heading for further declines. A break below the $0.339 support level could trigger a drop to $0.319, marking new lows for the cryptocurrency.

However, there are some glimmers of hope. The fact that whales appear to be accumulating ADA could signal that a price reversal is on the horizon, especially if market conditions improve and buying pressure returns.

In the short term, all eyes will be on ADA’s ability to hold key support levels and whether the broader crypto market shows signs of recovery. Until then, traders should brace for potential volatility as Cardano navigates this challenging market environment.

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Evie

Evie is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs.

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