Cardano Downtrend Persists — ADA Going to Face a Hard Redtember?
Price decreases in August. Will it face more downside in September?
Key Takeaways
- ADA decreased by 30% since July.
- Developer activity hit a record this year so far.
- But network activity is at its lowest level since January 2021.
- Chart analysis points out more downsides on the horizon.
ADA token price is facing a challenging period, having suffered a 30% decline over the past week. Following a significant market crash on August 16, ADA struggled to stabilize and consistently slipped through its previous support zones without substantial buyer pressure.
Amidst a broader market’s weakness, especially for Bitcoin and altcoins, many traders are selling off their holdings at every minor uptick, further pressuring asset prices, including ADA’s.
After a brief recovery in the $0.27 area, it has faced a difficult sustaining momentum, dropping below $0.26 due to a bearish sentiment and investors pulling out.
ADA is currently trading at $0.26, with a daily volume of over $213 million.
Potential Fed rate hikes in September and historically “Redtember” bearish trend may exert more downward pressure on the crypto market. But positive news like BlackRock’s ETF approval might shift the current bearish trend.
Barring significant external events, ADA’s price is expected to stay between $0.25 and $0.27 for the rest of the year.
What will happen in September may impact the general altcoin market which has been on a decline trend since July 13, with a value depreciation of almost 14%.
ADA Price Analysis
In some of our previous analyses, we pointed out two scenarios for the price of ADA and, in a bullish one, the price started its bull cycle on June 10, when it started increasing from $0.22 to its July 13 high of $0.38.
According to this bullish scenario, the following decline was a corrective pattern. But as we pointed out, it should have maintained above its 0.618 Fibonacci retracement level at $0.28 to be a primary one.
Since it didn’t and decreased to the lower Fib level of 0.786 at $0.255, now we expect a bearish scenario. In this case, the price made another upside correction between June 10 and July 13 and has since started its final bear move, going to result in a lower low under $0.22.
This would be wave Z of the higher degree count and could mark the completion of a multi-year bear market for the price of Cardano.
On-chain data
ADA has been drawing attention lately based on its technical factors and DeFi products. Developer activity has been high in recent months and further increased in July.
Looking at Santiment data, it can be seen that in August it reached a yearly high. This is likely to be due to its DeFi products taking off.
As of June 30, 2023, Cardano’s Total Value Locked (TVL) witnessed a year-to-date growth of 198.6%. This surge in TVL is largely due to the expansion of its ecosystem.
During Q2, Minswap emerged as Cardano’s most popular dApp, handling 1 million monthly transactions in both May and June, marking a 167.5% increase quarter-over-quarter. This impressive volume outpaced the leading NFT marketplace, jpg.store, in terms of dApp transactions.
On the other hand, the network activity remains small. From its all-time high, a clear downtrend in daily active users can be seen and, from July 23, this further diminished, reaching its lowest point since January 2021.
Conclusion
It appears that the price of Cardano is going to face a challenging September. Even with its new technological advancements and its thriving DeFi sector, it wasn’t able to spark investors’ interest. This can be attributed to several factors, including an overall bearish market sentiment.
Price structure shows there isn’t any indication of a starting uptrend. More likely, ADA’s price is facing a downtrend from July 14, which is going to result in further lows under $0.22.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability, and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
