Cardano Price Falls Amid Market Correction, Yet Bullish Cycle Could Push Value to $0.81
Summary:
Cardano's (ADA) value fell by 7.75% on December 13, settling at $0.55. This slump is linked to an overbought correction that began in October, when ADA's price touched an 18-month high. ADA is now a part of broader crypto correction phase driven by U.S. economic indicators and the Federal Reserve's cautious stance on interest rates. However, ADA's four-hour chart indicates the possibility of a bullish cycle that could increase its value to $0.81 by year's end.
On December 13, Cardano's (ADA) value dipped by 7.75%, settling at $0.55 within the past day. This slump is captured by the ADA/USD four-hour price chart available on TradingView. To grasp why Cardano's prices have taken a tumble of late, we need to examine some influencing factors.
First, from a technical standpoint, the fall in ADA's price is a consequence of an adjustment phase that set off on October 9. On this date, ADA touched an 18-month high of $0.64. With the relative strength index (RSI) on short-duration charts exceeding 70 and marking Cardano as "overbought," traders started to cash in on their earnings. An RSI over 70 signals that the asset has become overvalued, potentially leading to a reversal in the trend or a corrective rollback.
Currently, ADA is undergoing a corrective rollback, mirrored by its restricted, range-bound movement within a triangular formation. This phase illustrates market ambiguity where both buyers (bulls) and sellers (bears) lack dominance.
Coinciding with ADA's price slump on December 13 was a slight decrease in ADA supply possessed by addresses holding over 1 million units. However, in December, control over ADA supply by this cluster increased from 21.62 billion to 21.66 billion tokens. With this surge aligning with Cardano's 50% price rally during the same timeframe, it's clear that these 'whales' have impacted ADA's short-term price trends.
Echoing the broader crypto market's corrective phase, ADA seems to be following suit. Traders' selling sentiment might have been driven by new U.S. consumer price index (CPI) data. Interestingly, while U.S. headline inflation dipped to 3.1% YoY, meeting predictions, core CPI YoY remained stationary at 4%. However, there was a minor MoM increase, implying the Federal Reserve could remain wary of interest rate cuts in the upcoming months. Data from CME's Fed futures indicates a 98.2% chance that the US central bank will maintain rates ranging between 5.25-5.50% in their December 13 meeting.
Such a prolonged interest rate position might bolster the U.S. dollar and exert downward pressure on cryptocurrencies like Cardano. This can primarily be attributed to the year-long inverse correlation between ADA and the greenback.
Looking ahead, Cardano's pennant structure on the four-hour chart indicates a potential bullish cycle. Typically, these triangle-like formations associated with uptrends resolve when the price surpasses their upper trendline, matching the previous uptrend's magnitude.
As a result, if ADA breaks out of its bullish pennant in an upward direction, it could hit $0.81 by year's end, a leap of roughly 40% within the following fortnight.
ADA's 50-4H exponential moving average (50-4H EMA; captured by the red wave) situated around $0.528 is also fueling its rebound potential toward $0.81. In contrast, a harsh break below $0.528 would threaten to push the price toward the 200-4H EMA (visualized by the green wave) near $0.42.
This piece does not provide investment advice or suggestions. As every investment and trading move comes with risks, readers should undertake their research before making any financial decisions.
Published At
12/13/2023 1:25:29 PM
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