Cardano (ADA) has recently been facing significant downward pressure, struggling to maintain its foothold above key support levels. After an attempt to break through the $0.3680 resistance level on October 7, ADA has experienced a notable decline, similar to the broader market trends seen with Bitcoin and Ethereum. This bearish sentiment has raised concerns among investors and analysts about Cardano’s future price trajectory, with some suggesting the cryptocurrency could be at risk of a further decline to as low as $0.22.
Cardano’s Recent Price Action
Over the past few weeks, Cardano has formed a short-term top, followed by a fresh downturn. This decline has seen ADA slip below critical support levels at $0.3550, aligning with a bearish trend observed across the cryptocurrency market. As of press time, ADA is trading at approximately $0.3385, marking a 1% decline and reinforcing the bearish sentiment surrounding the asset.
Potential Risks for Cardano
A TradingView analyst, Siyamakbayrami, has closely tracked ADA’s price movement, highlighting a descending weekly trend. His analysis points to a sharp uptrend that led Cardano to its March peak of around $0.80. However, this rally was followed by a significant correction that erased most of those gains, leading to ADA entering a consolidation phase.
Cardano has since been trading in a narrow range between $0.33 and $0.45, a period that reflects market indecision. According to the analyst, if ADA fails to hold its current support at $0.33, the next key support level could be between $0.22 and $0.26. A drop to this range would represent a severe price crash, effectively wiping out all gains Cardano has made since the start of the year.
This potential downturn would bring ADA back to price levels it hasn’t seen since 2023, raising concerns about the sustainability of the network’s recent performance. Investors are closely watching these levels, as a failure to hold could trigger further selling pressure.
Holder Sentiment and Resistance Levels
In addition to technical analysis, insights into Cardano holders’ sentiment reveal a concerning trend. According to the Global In/Out of the Money (IOM) analysis, 77.50% of ADA addresses are currently “out of the money,” meaning these investors purchased their tokens at prices above $0.33. This high percentage of underwater investors creates a challenging situation for ADA’s recovery.
If ADA begins to rise, it could face significant selling pressure as these investors may look to exit their positions and recover losses. Analysts point to resistance levels between $0.35 and $0.54 as critical zones where this selling pressure is most likely to occur. These levels could hinder ADA’s ability to regain momentum in the short term, making a recovery more difficult.
Can Cardano Recover?
Despite the current bearish outlook, some analysts believe there may be light at the end of the tunnel for Cardano investors. Crypto analyst Ali Martinez has expressed optimism, suggesting that ADA holders are in the “depression phase” of the market cycle. This phase, typically marked by pessimism and negative sentiment, may present a unique buying opportunity for long-term investors.
Historically, market bottoms are often signaled by this depression phase, and those who accumulate during these downturns could potentially benefit from a market recovery. Martinez argues that while sentiment is currently low, Cardano could transition into a “disbelief” phase, where prices begin to rise again as the market regains confidence.
Conclusion: A Crossroads for Cardano
Cardano’s future is at a critical juncture. While the technical indicators and on-chain metrics suggest that the cryptocurrency could be at risk of further declines, especially if it fails to hold its $0.33 support level, there remains a possibility of a recovery. The next few weeks will be crucial for ADA, as investors watch key support and resistance levels closely.
If Cardano can hold its ground and avoid slipping into the $0.22 to $0.26 range, it may have a chance to recover and regain some of the bullish momentum it has lost in recent months. However, for now, the market remains cautious, and ADA investors are bracing for potential turbulence ahead.