What is Causing the Drop in Cardano Price Today?

Will Cardano (ADA) experience its fourth consecutive week of losses as its price has decreased by more than 3% on June 19th following a drop of more than 30% in the last two weeks?

No respite for Cardano price bulls

On June 19, ADA prices dropped more than 3% to a daily low of $0.257 as traders continued to evaluate Cardano’s inclusion in the list of crypto assets that the U.S. Securities and Exchange Commission (SEC) views as “unregistered securities.”

Furthermore, the Federal Reserve’s strong stance last week did not benefit Cardano’s (ADA) price either, with another 0.50% increase likely to occur in 2023. Generally, higher rates decrease the interest of investors in riskier assets, such as Cardano.

Open interest in derivatives linked to ADA has fallen to approximately $111 million, the lowest level since January 2021.

In the past day, liquidations totaling approximately $360,000 have occurred, with the majority of losses ($341,320) coming from long positions. This means that many traders who had previously held a bullish outlook on ADA have closed their positions by selling, likely contributing to the downward trend of June 19.

On June 19, ADA’s intraday price decreased while the U.S. dollar index (DXY) increased by 0.15%. This inverse movement could potentially lead to a decrease in their daily positive correlation coefficient from the current high of 0.82 in the upcoming days.

ADA bullish vs. bearish scenarios

Traders of the cryptocurrency Cardano demonstrated their endurance in the face of the SEC’s enforcement action two weeks ago, which was evidenced by a bullish rejection candlestick on June 5.

ADA’s price has increased by more than 15% since, yet it is still “oversold” as the daily relative strength index (RSI) is below 30.

These technical indicators suggest that ADA may be in for a period of consolidation or recovery.

Furthermore, if the optimistic situation comes to fruition, a descending triangle could be seen. This rise would give a goal of $0.30 in the upcoming weeks, representing an increase of 16.5% from the current cost.

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Conversely, it is likely that a descending triangle breakdown will lead to a 12% decrease towards $0.226 in the upcoming weeks, which is a significant area of support.