Cardano (ADA) and other cryptos completed two-month-long market doldrums characterized by record-low volatility levels by dumping massively. The eighth-largest digital asset, with $9.2 billion in market capitalization has over the last 24 hours witnessed a significant increase in trading volume to $414 million due to the sell-off to $0.26.
Since the Securities and Exchange Commission (SEC) laid claims on ADA being a security token, it has developed a noticeable correlation to XRP price.
When Ripple partially won the case in July, where Judge Analisa Torres ruled that programmatic sales of XRP, such as those carried on third-party platforms like crypto exchanges are not securities, Cardano rallied approximately 32% from $0.278 to $0.367.
Investors suddenly started paying attention to tokens alleged to be securities by the SEC in June, including the likes of Polygon (MATIC) and Solana (SOL). Their interest was grounded on the fact that a win for XRP would provide precedence for tokens like ADA.
However, the SEC’s request to the court seeking to appeal a part of the ruling that states that XRP is not a security was granted on Thursday, sending shockwaves in XRP markets, with declines amounting to over 20%.
In addition to the weakening crypto market structure, made worse by reports that SpaceX has dumped $377 million of its BTC holdings, the SEC’s interlocutory motion contributed to the losses in Cardano.
Cardano Bears Face Exhaustion
ADA price is back to the drawing board, and trading levels in early June around $0.26. If the current price action is ignored, ADA has been on a downtrend since mid-April, following the New Year rally to $0.46.
The daily chart shows sustained downward pressure below a multi-month macro trendline where attempts to break out have ended in futility.
The ongoing retracement only rolled back the gains accrued in June and July, as the long-term outlook of ADA price continued to weaken. As observed, sellers pushed through the lower ascending trend line despite arresting the bearish situation in June triggered by the SEC’s security allegations.
Support at $0.24 came in handy, as it gave bulls a chance to stabilize the price before planning on the next course of action. A period of accumulation is expected between this support and the trendline resistance at $0.27.
Investors would be gauging the outlook of the rest of the crypto market, especially with the Federal Reserve insisted rate hikes, which are likely to continue despite the disinflation remarks made by the Chair Jerome Powell since June.
Traders would from now on be on the lookout for a break above two key levels; the immediate trendline resistance at $0.27 and the subsequent hurdle at $0.3. If successfully conquered, their attention would shift to the macro downtrend shown by the dotted trendline, where bulls will have an opportunity to push for gains targeting $1.
The Relative Strength Index (RSI) already shows ADA price is heavily oversold. In other words, there is a possibility of a rebound occurring as investors book their positions afresh. Losses below the grey band on the chart do not seem likely in the short-term but some analysts believe that the crypto market may face another dip before the next bull run starts.
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