Unraveling the Fall in Cardano’s Price

As of recent, Cardano’s value has been experiencing a slump, marking a fourth consecutive week of decline, spurred by concerns over a potential increase in interest rates, a regulatory crackdown by the SEC, and a rebounding U.S. dollar.

Analyzing the Drop in ADA’s Value

Cardano’s token, ADA, at $0.260, has experienced a decrease of over 3% as of June 19, following a 30% tumble over the past two weeks. Could this suggest ADA is bracing for its fourth consecutive week in the red?

Factors Causing Concern for Cardano Bulls

On June 19, ADA’s value dipped by over 3% to a daily low of $0.257. This was primarily driven by the trading community’s continued analysis of Cardano’s inclusion in the SEC’s list of crypto assets deemed as “unregistered securities.” Furthermore, the Federal Reserve’s increasingly vigilant stance from the previous week didn’t do ADA’s price any favors, with a likely 50 basis point hike projected for 2023. Such rate hikes generally dampen investor interest in riskier assets like Cardano.

Indicative Trends in ADA-Related Derivatives

Coinciding with these developments, the open interest in ADA-affiliated derivatives has plummeted to around $111 million, the lowest level since January 2021.

ADA’s Downward Pressure and the Role of the U.S. Dollar

Over the last 24 hours, liquidations amounted to roughly $360,000, with long positions bearing the brunt of the losses, totaling $341,320. Essentially, this implies that more bullish traders have exited their positions by offloading ADA, which probably exacerbated the downward pressure on June 19.

Further adding to ADA’s woes, the token’s intraday price decrease on June 19 corresponded with a slight increase (0.15%) in the U.S. Dollar Index (DXY). This inverse relationship could disrupt their usual daily positive correlation in the upcoming days, currently standing at a yearly high of 0.82.

Implications and Possible Future Scenarios for ADA

This suggests that ADA might continue its downward trajectory should the dollar continue to rise in June, especially now that the latter has begun its recovery within the existing symmetrical triangle pattern.

Analyzing Bullish and Bearish Scenarios for ADA

Despite the SEC’s clampdown a couple of weeks ago, bullish Cardano traders displayed resilience, indicated by a bullish rejection candlestick on June 5.

Although ADA’s value has since increased by over 15%, it still remains in the “oversold” territory with the daily relative strength index (RSI) falling below 30.

Such technical signals suggest that ADA could be heading towards a more extended consolidation or recovery period.

If this bullish scenario unfolds, we might see a descending triangle come into play, aiming for a target of $0.30 over the coming weeks, indicating a potential 16.5% increase from current levels.

On the flip side, if a descending triangle breakdown occurs, we may see a likely decrease of 12% towards $0.226, a potentially crucial support area, in the upcoming weeks.