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Highlights
- Cardano price is at risk of further downside after forming a death cross pattern.
- ADA has also formed an inverse cup-and-handle pattern, a popular continuation sign.
- Data shows that active Cardano users and futures open interest has retreated.
Cardano price rose for two straight days, mirroring the performance of most cryptocurrencies. However, it is likely that ADA price will erase these gains after forming an inverse cup-and-handle, a death cross, and as the number of active users fall.
Cardano trades at $0.584, with CoinMarketCap data showing that its 24-hour volume of $1.24 billion. Its market capitalization has risen to $20.6 billion.
Cardano Price Forms Inverse Cup and Handle Pattern
The daily timeframe shows that the Cardano price has retreated after peaking at $0.863 on May 12. It formed a death cross pattern on June 4, as the 50-day and 200-day Exponential Moving Averages crossed each other. A death cross often leads to more downside as it signals that bears have prevailed.
ADA price is also slowly forming an inverse cup-and-handle pattern, a popular continuation sign. This pattern comprises a horizontal support, which in this case, is at $0.519. It also has a rounded top, whose upper side is at $0.863.
The handle section is characterized by a pullback or a consolidation, which is now happening. This handle section is then followed by a bearish breakdown.
The profit target in an inverse C&H pattern is established by first finding the height. In this case, the peak is $0.863 and its lower side is $0.519, giving it a height of $0.344. The breakdown point is the lower side of the cup at $0.519, giving it a target of $0.179 ($0.519 minus $0.344).
A move above the 200-day moving average at $0.703 will invalidate the bearish ADA price forecast.
Cardano Active Users are Falling
Third-party data shows that Cardano’s network is not doing well, especially for a project valued at over $20 billion. Per Artemis, Cardano Chain’s daily active users have been on a freefall this year. It had 20,000 users in June, down from last year’s high of over 54.4k. It has dropped for several consecutive months.
Further data reveals that the number of transactions has dropped to 619k this month, the lowest level in over a year. Transactions peaked at 2.8 million in November last year. In contrast, Solana’s transactions in the past 30 days stood at over 2 billion.
Cardano’s chain fees have also tanked to just $146,000 in the last 30 days, down from $978,000 in December last year. Solana made over $26 million in the same period. Its stablecoin supply has dropped to $31 million, a tiny amount considering that Unichain, which Uniswap launched in March, has over $327 million.
Cardano price could also crash as the futures open interest plunges. It has dropped by over $678 million, down from the year-to-date high of $1.5 billion.
Summary
ADA price may be on the verge of a major breakdown after forming a death cross pattern. It has also formed an inverse cup-and-handle pattern, a popular bearish continuation sign. Cardano also has weak fundamentals, like the falling addresses and low stablecoin supply.
Frequently Asked Questions (FAQs)
1. Why is Cardano price at risk of a bearish breakdown?
2. Which is the potential ADA price target?
3. Is Cardano a good buy today?
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