Will ADA Price Bounce Back or Drop to $0.56?
Cardano’s ADA faced a significant 12% decline in value over the past week, as selling pressure persisted following Bitcoin’s fall below $90K. Not even the acknowledgment of the Grayscale Cardano ETF managed to boost demand, highlighting the macro uncertainty as a major risk factor for the altcoin and the broader market.
Despite this, there was a small 2% reduction in Bitcoin dominance, potentially providing some relief for altcoins like ADA. So, what does the current price movement suggest?
Cardano Approaches a Crucial Point
As of now, Cardano has dropped by 50% since reaching its peak of $1.3 in December, forming a downtrend channel over several months (depicted in white on the chart). The current price action has revisited the lower end of this channel, which also acts as a bullish order block at $0.69 (potential support level, marked in cyan).
Nevertheless, the technical indicators are giving conflicting signals. The daily RSI remains below a neutral point, indicating limited demand. On the other hand, the Chaikin Money Flow (CMF) has turned positive, suggesting an increase in buying pressure.
In simple terms, ADA bulls may defend the range’s lower boundary if Bitcoin shows signs of recovery. Conversely, a sustained sell-off could pull ADA down to $0.56, the first significant support zone following the post-US election rally.
Declining Speculative Interest in ADA
The reduced speculative interest in ADA is also evident in the Futures market. Within just a month, speculative interest in the altcoin has plummeted by over 60%, from $1.48B in January to $555M currently, indicating that investors are pulling out of derivative markets – a bearish sign.
From a liquidity standpoint, there are four crucial liquidity zones (highlighted in bright yellow) that traders should monitor, which are located at $0.78, $0.75, $0.7, and $0.62.
The $0.78 level aligns with the mid-range level of the channel, while $0.62 corresponds with the lower boundary of the range. In the event of a liquidity sweep, ADA’s price could oscillate between these essential levels, particularly if Bitcoin fails to establish a clear trend.