Cardano has breached a crucial support level.
Any sign of weakness could trigger a sell-off.
ADA risks plummeting toward $0.50.
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Cardano is more than 74% short of its all-time high of $3.16 recorded in early September 2021. Although ADA’s downtrend has been significant enough, on-chain and technical indexes point to further losses on the horizon.
Cardano Looks Bound for Losses
Cardano appears to have lost a critical support level, which may result in a steep correction.
The so-called “Ethereum killer” has lost more than 35% of its market value over the last two weeks, retracing from a high of $1.26 on Feb. 8 to hitting a new yearly low of $0.81. Despite the significant losses incurred, ADA could be bound for another downswing.
IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model reveals that Cardano has breached a vital demand barrier. Nearly 63,700 addresses have previously purchased over 1.4 billion ADA at an average price of $0.96. Now that prices have dipped below this support zone, signs of weakness could encourage market participants to sell their holdings to avoid seeing their investments go further into the red.
As the IOMAP indicates that Cardano does not have any significant support barrier underneath it, another spike in downward pressure could cause a dramatic downturn.
From a technical perspective, the bearish thesis prevails as the seventh-largest cryptocurrency by market cap has lost the 100-week moving average as support. Although the current weekly candlestick is yet to close below this trend following indicator, it already projects a very pessimistic outlook. The 200-week moving average represents the next support level at $0.50.
Given the lack of support, paying close attention to the end of the weekly trading session is imperative to confirm whether the 100-week moving average has been breached. If prices were to move back above this interest area, Cardano could potentially avoid crashing to $0.50. Instead, it might gain the strength it needs to rebound toward the 50-week moving average at $1.60.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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