Cardano Plunges 22% as Whale Activity Triggers Support Test at $0.50
Market Pulse
- Cardano (ADA/USD) witnessed a steep decline after hitting more than two-week highs at 0.6894 on Friday.
- The fifth-largest cryptocurrency by market capitalization is on track to break the two-day winning streak that it started on September 27.
- The retreat in ADA price was mainly propelled by the broad-based USD rebound, which was prompted by Fed’s 35 basis points rate hike in the overnight reverse repo rate.
The rate increase was the largest on record and backed the king dollar across the board. It’s worth noting that the downside in the ADA spot was somewhat cushioned by the risk-on market mood, which was driven by optimism over the Evergrande debt issue. The Chinese property giant promised to make domestic bond payments, soothing widespread concerns of a default event. China’s efforts to shore up growth also helped lift the overall market sentiment, capping ADA/USD losses.
Cardano’s price continued to nosedive this week, as it lost 22.2% of its value after reaching a monthly high. Whale sales overpowered positive news of an upcoming 2025 summit, focusing on AI, and possible ETF approval. ADA now changes hands at $0.501, wiping out gains from last month’s news-driven listing bounce. In light of its promising technical and fundamental use-case, many traders will be hoping that the round-number $0.50 level will support the ailing price. Will it, or is this the beginning of a greater pullback?
| Metric | Value |
|---|---|
| Asset | CARDANO (ADA) |
| Current Price | $0.50 |
| Weekly Performance | -11.95% |
| Monthly Performance | -22.20% |
| RSI (Relative Strength Index) | 33.0 |
| ADX (Average Directional Index) | 47.6 |
| MACD (MACD Level) | -0.04 |
| CCI (Commodity Channel Index, 20-period) | -125.30 |
Momentum Exhaustion Signals Capitulation Phase Complete
The RSI is an excellent momentum indicator. Do you want to get rich trading ADA? Buy low and sell high! Fools wait for confirmation. Two weeks of consolidation have Cardano bulls waiting with bated breath for a less volatile environment to buy the next dip. It’s important not to turn bullish because you believe the worst is over; RSI doesn’t hit oversold as the correction ends. RSI touches oversold after the bounce begins. The best oscillator on the market for altcoin trading just reached extremely low levels.
What is interesting, though, is the relative performance of gold and silver equities when compared to metal prices. Here is the GDX again but this time with the Gold/Silver ratio. GDX in blue and Gold/Silver ratio in the red line. Notice August 2010 and December 2010, GDX was diverging while the Gold/Silver ratio double topped. Fast forward to the present and we have the same setup occurring again. Either the stocks are too optimistic about metals and need to catch down or metals are too pessimistic and will rally stronger. The June lows are key and we should know if our short-term / long-term bottom is in shortly.
ADX at 47.58 Confirms Mature Downtrend Nearing Exhaustion
The strength of the downward move has been plain to see, with eight consecutive lower lows printed back-to-back on the daily chart. Likely, many more positions have been pared from the long side than taken on the short side over this downturn. To that end, the long/short ratio for Cardano across the major derivative platforms has levelled out, potentially indicating we may be going through the worst of the long-liquidation phase.
If we look back in time, Cardano’s ADX has rarely remained above 45 for more than several daily candles, and eventually, the trend loses its power to force a reversion to the average. Since the current trend is too strong, the momentum is oversold, additive conditions suitable for the end of a sale or even a pin turn. So, day traders will have to bite their elbows and get ready for increased volatility, since the powerful trend faces excess momentum. This typically leads to sharp price moves in one direction or the other.
50-Day EMA at $0.565 Looms as First Major Resistance
The 50-day EMA has historically played a pivotal role for ADA, both as support and resistance. In August, it held as strong support following the broader market’s impulse wave top before flipping to resistance two weeks later, ultimately leading to an additional 45% decline. The level is currently offering resistance as ADA holds beneath for three consecutive days.
The $0.456-0.481 zone has been pivotal dating back to 2018, with several inflection points in both directions. This level held as resistance on the way up in July 2020, and now it has reversed roles to the downside. It will be one of the first tests on any new rally attempt. The lowest weekly close going back to April 2020 came in at $0.404, with the liquidation spike low a few cents below that at $0.396. Weekly Bollinger bands are clocking in sub-$0.30 and dropping, providing another indication of just how dire the situation is for bulls at the moment.
Support Architecture Crumbles Below $0.50 Psychological Level
There are multiple technical and psychological barriers that the bulls need to overcome after breaking the XRP price below a vital trendline support. The XRP price is hovering just above the $0.514 monthly open after the reportedly sharp 20% decline on April 18. Follow-through pressure to the downside shrinks the XRP price through the 100-day EMA and triggers increased panic selling.
However, $0.50 has also previously marked the ultimate bottom for ADA/USD. This is where the pair found a multi-month nadir in 2018 before the coin grew by 250% in the following three months. A potential AFFECTIONATE PUNCH IN THE FACE followed by a rapid increase. This momentum eventually culminated in a 600% further gain to the $0.10 to $0.15 range, where ADA bounced the majority of the bear market.
The new REPHRASY model signaled the high probability of a breakdown given this fundamental/market structure confluence and our success collecting +7% rebates throughout the week as both market maker and short seller confirms that we cover the short just in time to lock in per share Schwab rebates after you exit the short position into the manic period. We will buy the stock lower in the window and go long in Q4 to bring share-count closer to 40 million which reduces the short interest from the 4 million range to an easy to cover 1.5 million range.
Bulls Need Volume Reclaim Above $0.565 to Shift Momentum
In order to restore faith in a significant upcycle, the psychology over $0.40 also has to shift, but we’d be getting too far ahead of ourselves before the key inflection at $0.642. Invalidation of that $0.40 psychological level would greatly strengthen the likelihood of a successful retest-turned-break next time. It’s wise to exert patience until the price confirms increased demand and sustains above $0.642 for at least four to seven sessions.
If ADA fails to hold the $0.50 support level for the next three weeks, it could pave the way to a further decline to $0.200. Volume Profile Visible Range showed the zone around the $0.200 mark has had significant interest from investors in the past, hence could serve as a strong demand barrier.
With the RSI in oversold territory, an ADX at an extreme reading, and the price sitting near significant psychological support, the most likely short-term result will be for the price to bounce from the $0.50 area and move up to test resistance at $0.534-$0.565. However, unless there are significant fundamental developments to change the whale narrative from distribution to accumulation, this bounce will likely be met with selling pressure.
