Cardano (ADA) price tumbled below $1 on Thursday, succumbing to a broader market sell-off triggered by the US Federal Reserve’s latest policy statement. While the Fed delivered a 25-basis-point interest rate cut as expected, its hint of fewer rate cuts in 2025 spooked investors, pushing Cardano and other cryptocurrencies lower.
ADA Underperforms Rivals
Cardano’s 25% decline in the past week has significantly outpaced the losses of rival Layer-1 coins like Ethereum (ETH), Solana (SOL), and Avalanche (AVAX), suggesting deeper underlying issues.
Waning Whale Demand
On-chain data reveals a concerning trend: a significant decline in whale demand for ADA. The volume of large transactions exceeding $100,000 – a proxy for whale activity – has dropped by a staggering $13 billion over the past two weeks, indicating waning investor interest.
Technical Analysis:
- Donchian Channel: ADA is currently testing the lower boundary of the Donchian Channel at $0.8688, a critical support level. The upper boundary at $1.3264 and the midline at $1.0976 pose significant resistance.
- Volume Delta: The negative Volume Delta (-88.06 million) signifies a significant imbalance between sell-side and buy-side activity, with sellers dominating. This aligns with the observed decline in whale demand.
Outlook:
- Downside Risks: If ADA fails to hold above the $0.8500-$0.8688 support range, the next likely support zone lies near $0.8000.
- Limited Upside Potential: Even if ADA rebounds towards $1, it will likely face strong resistance at the $1.0976 midline.
Conclusion:
Cardano’s price decline, coupled with dwindling whale demand and bearish technical indicators, suggests a challenging period ahead for the cryptocurrency. The potential for further downside risks remains high unless a significant shift in market sentiment occurs.
December 2024, Cryptoniteuae
