Cardano’s worst week since May 2021 is over — Will ADA price rebound 40%?

Cardano (ADA) experienced a slight rebound following a week in which it lost almost 30% of its value, the most substantial decrease in seven days since the crypto market crash in May 2021 caused by the Terra debacle.

Despite this, technical analysis suggests ADA is primed for a significant rebound in the near future.

ADA price up 30% from six-month lows

On June 12, the price of ADA surged 2.25% to $0.28, representing an increase of roughly 27% from the six-month low of $0.22 seen during the previous week. The rise coincided with gains in other areas of the cryptocurrency market, suggesting that investors were taking advantage of the dip.

The SEC’s designation of Cardano as an unregistered security in the legal action taken against crypto exchanges Binance and Coinbase is the cause of its poor week.

On June 9, the U.S.-based investment service Robinhood, which facilitates cryptocurrency trading, declared that it would no longer feature ADA on its platform. This preceded a sharp decrease of up to 30% in the value of ADA on the same day., a crypto exchange, had been providing Cardano as one of its services to its institutional customers based in the U.S. However, on June 9, it discontinued this service, thus limiting the potential of ADA to be adopted by mainstream investors in the U.S.

Cardano most oversold since March 2020

Cardano’s technicals, however, suggest that a rebound may be forthcoming. For example, the current token recovery is occurring after its daily relative strength (RSI) dipped to 20, the most oversold level since March 2020.

RSI readings that are oversold usually come before a price action that is either consolidating or recovering.

The ADA price experienced a 900% increase four months after March 2020’s oversold readings. This was largely attributed to the Federal Reserve’s quantitative easing policy, which lifted the outlook of riskier markets.

The Federal Reserve is likely to keep increasing interest rates due to the ongoing inflation, which should reduce the amount of money in circulation. Furthermore, the Securities and Exchange Commission’s enforcement of cryptocurrency regulations has caused an undesirable environment for tokens like ADA in the US.

Consequently, if a rebound occurs, it could be weaker than the one the market experienced following March 2020.

On the three-day chart, ADA appears to be stuck between $0.247 and $0.382, which is similar to the price movements seen in January 2021 and January 2023, as illustrated below.

Consequently, a recovery from the $0.247-support may initiate an upward trend towards $0.382 by October 2023. This $0.382-resistance, a rise of 40% from current levels, is also in line with the 200-3D EMA (the red wave).

Should the price decisively close below the $0.247 support, bears will be further emboldened to push the price down to $0.19 by October 2023, a level which had served as resistance from July 2020 to December 2020.

Nigeria’s regulatory body has reportedly suspended operations of Binance.

Categorized in: