- Cardano price has been in a strong bearish trend.
- ADA has formed a short-term bottom on the daily chart.
Cardano price is hovering near its year-to-date low as concerns about cryptocurrencies remain. ADA, the platform’s native token, is trading at $0.4900, which is a few points above last month’s low of $0.3900. It now has a market cap of over $16 billion, making it the 7th biggest cryptocurrency in the world.
Crypto sell-off
Cardano, like other digital coins, has been in a strong sell-off in the past few months. After peaking at $3 in 2021, the coin has fallen to $0.49, meaning that investors have seen over $75 billion in value disappear.
There are a number of reasons why Cardano price has been in a strong bearish trend. The most important one is the changing monetary conditions around the world. With inflation soaring, central banks like the Federal Reserve and the Bank of England have all turned extremely hawkish.
Last week, the Fed decided to deliver its most hawkish interest rate hike in almost 3 decades. It hiked rates by 0.75% and hinted that the trend will continue in the foreseeable future. Similarly, the BOE made its fifth consecutive rate hike.
Here’s how to buy Cardano.
Therefore, Cardano and other risky assets like stocks crashed as investors embraced the new normal in monetary policy. This is a normal that many investors have never experienced since interest rates have remained at record lows for more than a decade.
Cardano price is also falling as investors worry about its key building blocks. Like Ethereum, the success of Cardano will depend on the performance of key sectors like Decentralized Finance (DeFi), gaming, and the metaverse.
These sectors have nosedived in the past few months. The total value locked (TVL) in DeFi has tumbled from an all-time high of almost $250 billion to less than $80 billion. Cardano’s TVL has dropped to $110 billion. At the same time, most metaverse players have abandoned the industry.
Cardano price prediction
A look at the daily chart below shows that ADA price dropped to a low of $0.4157 during the weekend. This was the lowest level since May this year. This price action is notable since, unlike Bitcoin and Ethereum, it did not retest its multi-year low.
A closer look shows that the coin remains below the 25-day and 50-day moving averages. It also seems like it has formed a double-bottom pattern.
Therefore, while the overall outlook is bearish, we can’t rule out a short-term bottom as investors buy the dip. If this happens, the next key resistance level to watch will be $0.6672, which is the upper side of the double bottom pattern.
