Despite facing short-term gloomy price projections, the price of Cardano (ADA) is now potentially looking at a fall below $0.52. This situation has left long-term bulls wondering if it’s the right moment to purchase the dip. On Wednesday, a majority of the top 20 cryptocurrencies by market capitalization experienced losses, including Cardano.
The price of Cardano saw a decrease of approximately 2% during the day, bringing it down to \(0.0525. Despite reaching \)0.55 on Tuesday, ADA did not accept a retest of its 50-day moving average. Although the price of Cardano is still up by nearly 13% compared to the previous week’s lows, it is down by more than 20% from its highs in December.
The market mood remains fragile as traders express concern about the possibility of a “sell-the-fact” response to the recent spot Bitcoin ETF approvals in the United States. Additionally, the overall macro backdrop has become a headwind contributing to the current market condition.
Short-term headwinds are evident on the macro scale. Both the US Dollar Index (DXY) and US bond rates have been on the rise this year, which is generally seen as a negative factor for cryptocurrencies. Recent inflation and retail sales figures from the United States suggest that the economy finished 2023 with strong dynamics. This contrasts with earlier expectations that the Federal Reserve would lower interest rates as early as March.
According to the Fed Watch Tool provided by the CME, the money market estimated chances of a 25 basis point rate drop in March were around 55.7%. This reflects a decrease from about 65% recorded one week ago. Several Fed officials have noted that a rate reduction in March may be premature. Bank of America predicts the first interest rate reduction to happen in June. As a result, the macro risks appear to favor a sustained pricing out of a rate decrease in March. This could continue impacting the cryptocurrency market in the near term while strengthening the US dollar and bond rates.
Analyzing the price of Cardano, considering these macroeconomic headwinds, it is plausible that the price may continue its downward trend in the near future. Chart analysis supports this viewpoint. In 2024, Cardano broke its uptrend that began in mid-December and confirmed a negative trend by rejecting a retest of this uptrend earlier this week. Following the failed retest, the price has fallen below both the 21 and 50-day moving averages, indicating weakening momentum.
This emphasizes the high probability of a retest of the 2024 lows in the near future. The $0.46 region stands as a strong zone of support for the Cardano price. If the price does reach this zone once again, it could present an opportune moment to buy the dip.
In conclusion, the current macroeconomic headwinds and chart analysis suggests that the price of Cardano may decline further. However, if the price reaches the solid support zone around $0.46, it could present an attractive opportunity for investors to buy the dip.
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