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Current State of Cardano's Price
Cardano's price is experiencing a downturn today, extending its descending streak to a fourth consecutive week. This trend seems to be fueled by concerns over rate hikes, an SEC crackdown, and a strengthening U.S. dollar.
Cardano's price decreased by over 3% on June 19, following a 30% drop over the previous two weeks. Is Cardano (ADA) en route to its fourth consecutive week of declining price?
Challenges for Cardano Bulls
On June 19, ADA's price fell by more than 3% to daily lows of $0.257. This comes as traders continue to weigh the implications of Cardano's inclusion in the list of cryptocurrencies that the U.S. Securities and Exchange Commission categorizes as "unregistered securities."
Further pressure on ADA's price stems from the Federal Reserve's hawkish guidance last week, hinting at a probable 50 basis point hike in 2023. As higher rates typically deter investors' interest in risk assets like Cardano, this hasn't been a favorable development.
At the same time, the open interest in ADA-associated derivatives has plunged to around $111 million, marking its lowest level since January 2021.
In the past 24 hours, liquidations approximating $360,000 have been reported, with the most significant losses at $341,320 attributed to long positions. This implies that a number of bullish traders have exited their positions by offloading ADA, likely exacerbating the downward pressure on June 19.
Impact of the U.S. Dollar Index (DXY) on ADA
The intraday drop in ADA's price on June 19 was observed alongside a 0.15% increase in the U.S. Dollar Index (DXY). If this inverse relationship continues, it may disrupt their daily positive correlation coefficient, currently at a yearly high of 0.82.
This suggests that ADA's decline could persist if the dollar strengthens in June, given the latter's ongoing rebound within its current symmetrical triangle pattern.
ADA's Potential Bullish and Bearish Outcomes
Despite the SEC crackdown two weeks ago, bullish Cardano traders demonstrated a degree of resilience, as evidenced by a bullish rejection candlestick on June 5.
Since then, ADA's price has increased by over 15%, yet it remains "oversold" with its daily relative strength index (RSI) below 30. These technical indicators allude to a potential prolonged consolidation or recovery phase for ADA.
If this bullish scenario unfolds, a descending triangle could emerge. This upward movement could lead to a target of $0.30 over the forthcoming weeks, marking a 16.5% increase from the current price levels.
On the other hand, should a descending triangle breakdown occur, we could witness a 12% drop towards $0.226 – a potentially significant support level – over the next few weeks.
