Cardano (ADA) has recently experienced a sharp downturn, falling by 10% and dropping to a key support level of $0.65. The decline comes in tandem with Bitcoin’s struggle to hold above $90,000, further exacerbating the bearish sentiment across the cryptocurrency market. As Cardano tests its support at $0.65, traders are increasingly concerned about the potential for further declines, with some speculating that $0.50 may be the next target for the asset.

Cardano’s Price Struggles to Find Support

The latest drop in Cardano’s price has intensified the bearish pressure surrounding the cryptocurrency. On the daily chart, ADA has failed to overcome the 20-day Exponential Moving Average (EMA), signaling weakness in the current uptrend. After hitting a local resistance near the 50% Fibonacci retracement level at $0.7746, the asset has reversed direction, now testing the lower 38.20% Fibonacci level. This failure to break key resistance levels has set the stage for the ongoing downtrend.

Additionally, Cardano’s price has now breached the critical 200-day EMA at $0.7289, a level often considered a long-term trend indicator. As the price continues to fall, the next logical test will be its support trendline, which currently sits near the $0.60 psychological mark.

Technical Indicators Signal a Deeper Correction

The recent price action has led to several bearish signals from key technical indicators. Both the 50-day and 100-day EMA lines are on the verge of crossing over to the downside, a pattern often associated with further downward momentum. The Chaikin Money Flow (CMF) indicator, which measures the accumulation and distribution of an asset, has also turned negative, reinforcing the bearish outlook.

These technical signs suggest that the market sentiment remains predominantly bearish for Cardano. The failure to reclaim important support levels, combined with a weakening of key indicators, raises concerns that ADA may continue its downward trajectory in the near term.

Cardano’s Funding Rate and Market Sentiment

In addition to the technical factors, the Cardano funding rate has also been fluctuating significantly. Currently, the funding rate has dropped to 0.0045%, reflecting a decline in investor confidence and reduced buying activity. Moreover, the open interest in Cardano derivatives has fallen by 15%, now standing at approximately $544.94 million. This decrease in open interest suggests that traders are hesitant to take on long positions in ADA, further adding to the bearish sentiment surrounding the asset.

Despite these concerning signs, there is a glimmer of optimism among some Cardano traders, particularly those on Binance. The long-to-short ratio on Binance has remained relatively high at 2.73, indicating that some traders still hold a positive outlook on ADA’s future prospects.

Cardano ETF Proposal: A Potential Catalyst for Recovery?

A potential fuel for Cardano’s recovery comes from the recent filing for a Cardano exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC). NYSE Arca, a subsidiary of the NYSE Group, has made a proposal to list and trade shares of Grayscale’s Cardano Trust. If the SEC approves this filing, it could signal greater institutional interest in Cardano and provide a much-needed boost to its price.

While this news has provided some short-term optimism, the market’s reaction remains cautious, with the broader crypto market still struggling with volatility and uncertainty.

Looking Ahead: Can Cardano Hold $0.65?

As Cardano continues to test its $0.65 support level, the outlook remains uncertain. If the market remains volatile, a further decline to $0.50 may become more likely. However, if the broader crypto market stabilizes and the Cardano ETF proposal gains traction, ADA could see a recovery.

For now, traders will be watching closely to see if Cardano can hold its ground at $0.65 or if a deeper correction is in store. With critical technical levels at risk, the coming days will be pivotal in determining whether ADA can reverse its bearish trend or continue its downward spiral.