- Cardano’s ADA token is testing a critical support level, with a failed attempt potentially leading to a further price decline.
- The token has seen a decrease of over 4% in the last seven days.
- Most metrics and indicators suggest that ADA might fail to test its support, putting its position in the top 10 cryptocurrencies at risk.
Cardano’s ADA token is at a critical juncture, with a potential failure to test its support level possibly leading to a further price decline. This article delves into the factors contributing to this scenario and its potential implications.
Cardano’s Critical State
Like most cryptocurrencies, ADA’s weekly chart is in the red, with the token’s price dropping by more than 4% in the last week. In the last 24 hours alone, Cardano has witnessed a 1.6% price drop. As of writing, ADA is trading at $0.4383 with a market capitalization of over $15.6 billion, making it the 10th largest cryptocurrency. However, this top 10 spot might be at risk as the token’s price is sitting at a crucial support level.
Will ADA Test Its Support?
Analysis of ADA’s daily chart reveals that the token is just about to reach its support level of $0.4353. The token has already touched this support twice in the past few weeks, each time managing to successfully test it and bounce back. If the same happens on this occasion, then ADA might approach its resistance near $0.51. However, if it fails to test this level, then things can get dangerous.
Analysis of Santiment’s data shows that ADA’s MVRV ratio dipped last week. After the increase, whale activity around the token also declined. Cardano’s NVT ratio spiked, meaning that it was overvalued, which hinted at a further price drop. Additionally, its Weighted Sentiment declined, meaning that bearish sentiment around the token was dominant in the market. These metrics suggest that the possibility of ADA plummeting under its support is high.
Technical Indicators and Future Outlook
Technical indicators show that ADA’s price is resting under its 20-day Exponential Moving Average (EMA). Both its Chaikin Money Flow (CMF) and Relative Strength Index (RSI) registered downticks. The Money Flow Index (MFI) also started to decline, indicating that it was much more likely for the token to go under its support. Nonetheless, the MACD provided much-needed hope as it showed that bulls were still leading in the market.
Conclusion
If ADA fails to test its support, Cardano’s price might first fall to $0.41. At that level, ADA will have an opportunity to rebound. However, the current metrics and indicators suggest a high possibility of a further price drop. Investors must remain cautious and monitor the situation closely.
