Amidst the current price adjustment in the crypto market, Cardano [ADA] is showing signs of a potential significant price dip, with its daily chart displaying a bearish formation.
Similar to ADA, other major cryptocurrencies such as Bitcoin [BTC], Ethereum [ETH], and Solana [SOL] have also undergone price corrections.
Cardano’s Critical Levels
Based on technical analysis by CryptoCrypto, ADA is exhibiting a bearish outlook with the formation of a bearish pin bar candle that touched the resistance from the descending trendline at the current time.
The appearance of this candlestick pattern on the daily chart is interpreted as a bearish signal, influencing traders and investors to consider establishing short positions.
Since April 2024, ADA has encountered this resistance level multiple times, facing selling pressure on each occasion. Anticipations within the crypto community suggest a recurrence of the selling pressure leading to a drop in prices.
Observing recent price movements, if ADA closes a daily candle below the $0.3912 threshold, a potential 20% decline to around $0.31 could be expected in the upcoming days.
Nevertheless, this pessimistic scenario remains valid as long as ADA continues to trade under the $0.42 level. A breach of this level might invalidate the bearish perspective.
ADA’s Bearish Trend in On-Chain Data
The bearish sentiment towards ADA is further reinforced by on-chain metrics. Coinglass, an on-chain analytical company, reported ADA’s Long/Short Ratio as 0.93 currently, indicating a prevailing bearish sentiment among traders.
Moreover, the Futures Open Interest for ADA has remained stable over the last 24 hours, suggesting a neutral stance from traders.
As per the latest data, 51.63% of prominent traders have taken short positions, while 48.37% are in long positions.
Considering all these factors collectively, it is evident that bears are currently in control of the asset, potentially leading to a significant price decline in the days ahead.
At the time of publication, ADA was priced around $0.385 after experiencing a 1.4% decrease in the past 24 hours. The trading volume has also decreased by 35%, indicating reduced trader engagement amidst the prevailing bearish market sentiment.