Cardano’s worst week since May 2021 is over — Will ADA price rebound 40%?
2023.06.12 06:43
Cardano (ADA) bounced modestly after nosediving nearly 30% in the last week, its worst seven-day performance since May 2021, when the Terra collapse sparked a cryptocurrency market crash.
Nonetheless, ADA looks ready to undergo a sharp recovery in the coming months, based on technical analysis.
ADA price up 30% from six-month lows
On June 12, ADA price rose 2.25% to $0.28, up around 27% from the six-month low of $0.22 last week. The rise appeared alongside gains elsewhere in the crypto market, hinting at investors buying the dip.
ADA/USD daily price chart. Source: TradingView
The reasons behind Cardano’s bad week include the United States Securities and Exchange Commission (SEC) labeling it an unregistered security in lawsuits filed against crypto exchanges Binance and Coinbase.
On June 9, U.S.-based investment platform Robinhood, which allows users to trade cryptocurrencies, announced it would delist ADA from its platform. This preceded a 30% drop in ADA’s price on the day.
ADA’s market dominance daily chart. Source: TradingView
Cardano was also part of the services offered by crypto exchange Crypto.com to its U.S.-based institutional clients. On June 9, the company terminated those services, thus restricting ADA to its potential mainstream investors base in the United States.
Cardano most oversold since March 2020
Cardano’s technicals, however, hint at a possible rebound ahead. For instance, the ongoing token recovery comes a day after its daily relative strength index (RSI) dropped to 20, the most oversold since March 2020.
ADA/USD daily price chart. Source: TradingView
Oversold RSI readings typically precede a consolidating or recovering price action.
For instance, the ADA price had jumped 900% four months after March 2020’s oversold readings. It also happened due to the Federal Reserve’s quantitative easing policy, which boosted upside sentiments across the riskier markets.
However, the Fed is poised to continue hiking interest rates as inflation persists, which should remove excess cash from the market. In addition, the SEC’s crypto crackdown has created unfavorable market conditions in the U.S. for crypto assets like ADA.
Therefore, an oversold rebound, if it comes, could be weaker than what the market witnessed after March 2020.
On the three-day chart, ADA appears rangebound inside the $0.247–0.382 area, similar to its price trends in January 2021 and January 2023, as shown below.
ADA/USD 3D price chart. Source: TradingView
Therefore, a rebound from the $0.247 support may start an uptrend toward $0.382 by October 2023. The $0.382 resistance, up 40% from current levels, also coincides with the 200-3D EMA (the red wave).
Conversely, a decisive close below the $0.247 support gives bears more fuel to pull the price toward $0.19, down about 30% by October 2023, a resistance-turned-support level from the July 2020 to December 2020 session.
Related: Nigeria regulator halts Binance operations: Report
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
