Cardano (ADA) price is in the process of drawing its seventh monthly red candle in a row as the coin dropped to its lowest level since February 2021.
The trend saw the ADA price rise by about 800% to $3.16 between February 2021 and September 2021, followed by a complete erasure of those gains with the entry into October 2022. Surprisingly, the entire price action took the form of “Burj Khalifa”, the world’s tallest skyscraper in Dubai.
Ada Khalifa pic.twitter.com/KE2SxTO3bN
– Trader_J (Trader_Jibon) October 19, 2022
ADA eyes price 35% collapse price
The ADA price correction primarily started following a similar downtrend across the cryptocurrency market, led by the Federal Reserve raising interest rates to tame rising inflation.
Even the upbeat upgrade of Cardano’s Dubbed Vassil wasn’t enough to get its buyers back on the market.
Notably, ADA’s price has fallen nearly 20% since Vasil’s hard fork about a month ago – an update aimed at improving its network scalability and smart contract capabilities.
Moreover, the ADA/USD pair also broke below a major support level that could trigger another major crash in the fourth quarter.
The mentioned support level at around 0.42 USD forms a descending triangle, a continuation pattern. In other words, ADA’s ability to continue its dominant downtrend becomes higher if it forms and exits from the descending triangle to the downside.
At the same time, as a rule of technical analysis, the breakdown of the descending triangle during a downtrend pushes the price down to a level with a length equal to the maximum height of the pattern. Therefore, the ADA risks falling towards $0.248, or 35%, if the descending triangle breakdown occurs.
ADA dollars Now check the lights out level and go to where the coins go when you die. Prob got -50% in his imo for breaking level
And I don’t choose it in any way. I have posted charts for many alerts including one dollar And the ETH dollar In December – January pic.twitter.com/Of0TNZfXKK
– Pentosh (@Pentosh1) October 19, 2022
On the contrary, a retest is followed by a close above the lower trend line of the triangle as resistance raises the potential for ADA to nullify the bearish outlook. In doing so, it can lead to the formation of a descending channel simultaneously with the ascending triangle, as shown below.
The descending channel setup sees the ADA bounce from the lower trendline to test the upper trendline near $0.45 as an immediate upside target. In other words, a temporary price rebound of 30%.
Overall risks remain
Overall, Cardano continues to move ahead with macro risks, mainly after a September reading of 8.2% for inflation, raising the possibility that the Fed will continue to raise rates for the remainder of 2022.
Risk assets across the board saw a drop in retail investor enthusiasm, which was instrumental in driving cryptocurrency prices higher in 2020 and 2021. Robinhood CEO Vlad Tenev, for example, noted:
“In 2020 and 2021, people were really interested in investing in stocks. There was widespread participation in the stock market. Now people are talking about gas prices and inflation.”
The ADA, whose positive correlation coefficient with the US S&P 500 has remained above 0.80 for most of 2022, has seen its daily active headlines (DAA) drop sharply since the market top in November 2021.
Related: Cardano Founder Points out flaws in Ethereum and Bitcoin
Notably, the 30-day average DAA fell to 165,000 on Oct. 19, its lowest level in two years, according to data from Santiment.
On a brighter note, the number of Cardano addresses containing 100-1000 ADA and 1000-10000 ADA tokens increased during the bear cycle, indicating a potential backlog by large investors, or so-called whales.
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.
Originally published at San Jose News Bulletin
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