- Cardano price sank to the lowest level since July 27th.
- The US dollar index made a strong return as it rose to $108.
Cardano price joined other cryptocurrencies in staging a major meltdown. ADA dropped to a low of $0.45, which was the lowest level since July 27th of this year. It has fallen by more than 22% from the highest level this month. Other cryptocurrencies like ETH, BTC, and XRP have all sunk.
US dollar index rallies
It is unclear why Cardano and other cryptocurrencies have declined sharply. A possible reason can be seen in the performance of the US dollar.
The dollar index has surged in the past few days and is currently trading at $108. This price is about 3.22% from the lowest level this week. It is also the highest level it has been since July 15.
Historically, cryptocurrency prices tend to have an inverse relationship with the US dollar. This means that they usually decline when the dollar index rallies.
A possible reason for this is that the USD rises when investors expect the Federal Reserve becomes extremely aggressive. The bank has hiked interest rates by 225 basis points this year. It has also started a program known as quantitative tightening, which involves reducing its giant balance sheet.
Learn more about how to buy Cardano.
Minutes published this week revealed that the bank expects to keep hiking rates in the coming months. As a result, analysts believe that the bank will hike rates by 50 basis points in September and then hike by 0.25% in the final two meetings of the year.
Cardano price has also crashed because of internal factors. For one, its ecosystem has thinned in the past few weeks. According to DeFi Llama, Cardano has a total value locked (TVL) of less than $90 million, making it the 27th biggest smart contact platform. At its peak, it had a TVL of over $300 million.
Cardano price prediction
The four-hour chart shows that the ADA price rose to a high of $0.5952 this month. This was the highest level in months. Recently, however, the coin has made a bearish reversal. As it dropped, it moved below the ascending trendline show in blue. As a result, it invalidated the ascending triangle pattern. The coin dropped below the 25-day and 50-day moving averages.
At the same time, the Relative Strength Index (RSI) and the MACD declined sharply. Therefore, the coin will likely continue falling as sellers target the next key support at $0.40. A move above the resistance at $0.50 will invalidate the bearish view.
