Cardano’s price suffered a harsh reversal during the weekend as the recent strong rally took a breather. After ADA jumped to a multi-year high of $1.1500, it dropped sharply to a low of $0.95, its lowest point since Thursday last week.
Why Cardano price slumped
There are three main reasons why the price of ADA dropped sharply during the weekend. First, the sell-off mirrored the performance of Bitcoin and other altcoins. Bitcoin retreated to $96,000, down from $99,600 last week. This drop triggered more sell-offs in the crypto industry, with other layer-1 coins like Avalanche, Ethereum, and Sui falling.
Second, the coin dropped amid profit-taking after it staged a strong rally a few weeks ago. It was up by almost 260% between its lowest level in October and its highest point this month. In most cases, such bullish breakouts are usually followed by a brief pullback.
Third, in line with the second point, ADA price dropped because of a situation known as mean reversion. This is a situation where an asset drops to match its moving averages In this case, the coin needs to drop by about 44% to reach its 50-day moving average and by 55% to get to its 200-day MA level.
Read more: Cardano Price Prediction: To Surge 35% Amid Rotation from SOL to ADA
Is it safe to sell ADA now?
Now, with the price of Cardano falling, is it a good thing to sell or go short? Most crypto analysts believe that the coin has more upside to go. In an X post, one analyst known as EL, noted that the ongoing pullback was a normal part of the process. He cited the last bull when the coin consolidated below $1 and then surged to $3, its all-time high.
Other analysts also believe that the price of Cardano has more gains to make. Trend Rider noted that the coin will likely have more volatility and then resume its bull run. Such huge swings are common, especially when an asset has just made a strong triple-digit move.
Technically, we suspect that the coin will drop to the key support at $0.8100 and then resume the bullish trend. This is a notable price since it was the highest level on March 14 this year.
This pattern is known as a break and retest and is one of the most popular continuation signs. More gains will be confirmed when the coin rises above the year-to-date high of $1.1500.
Read more: Cardano Price Prediction as Crypto Pro Sees a Strong ADA Surge
