BingCrypto | Why is Cardano price down today?

[ad_1]

Cardano’s (ADA) price is down today, falling 7.75% in the last 24 hours to hit $0.55 on Dec. 13.

9b1fd6da 9b4c 45d0 abad 9607bff0ac17 — *ADA/USD four-hour price chart. Source: TradingView*

Let’s discuss factors that have been driving the Cardano prices lower recently.

Overbought correction

From the technical perspective, ADA’s price drop today is part of a correction cycle that started on Oct. 9, when ADA’s price reached its 18-month high of $0.64.

Traders secured profits as Cardano’s relative strength index (RSI) on shorter-timeframe charts became “overbought” after crossing 70.

An RSI reading above 70 means the asset is trading is getting overvalued and may undergo trend reversal or corrective pullback.

9f7aa0f5 e513 48c2 9338 e145b8ab1417 — *ADA/USD four-hour price chart. Source: TradingView*

ADA is pursuing a correction pullback, confirmed by its limited and range-bound movement inside a triangle structure. This period reflects the market’s indecision, where neither the bulls (buyers) nor the bears (sellers) are in control.

ADA supply dwindles among richest addresses

Cardano’s price drop on Dec. 13 coincides with a modest drop in the ADA supply held by addresses with a balance of over 1 million units.

059531fd 716d 4339 8d81 0950d71afb73 — *ADA supply in addresses with a balance over 1 million units. Source: Messari/CoinShares*

Notably, the cohort’s control over the ADA supply has increased from 21.62 billion to 21.66 billion tokens so far in December. Its jump coincides with Cardano’s 50% price rally in the same period, hinting that these whales have influenced ADA’s short-term price trends — and Dec. 13 is no different.

Crypto market downturn

The entire crypto market is correcting from its overbought levels and ADA seems to mirroring the same pattern. Factors that may have boosted traders’ selling sentiment include the recent U.S. consumer price index (CPI) data.

a2c80f36 dbba 4c75 85be 9105b7223b24 — *Crypto market cap’s daily performance chart. Source: TradingView*

Notably, the U.S. headline inflation dropped to 3.1%, year-over-year (YoY), aligning with forecasts. Meanwhile, core CPI YoY remained unchanged at 4%. But there was a slight uptick in month-over-month (MoM) figures, with headline and Core CPI at 0.1% and 0.3%, respectively.

This suggests the Federal Reserve may stay cautious about cutting interest rates in the coming months. CME’s fed futures rate data shows a 98.2% possibility that the U.S. central bank will keep the rates steady at 5.25-5.50% at their Dec. 13 meeting.

e51419dc 1ba3 4b20 8292 44287ed21f55 — *Fed target rate probabilities for Dec. 13 meeting. Source: CME*

A higher-for-longer interest rate stance may strengthen the U.S. dollar and, thus, pressure cryptocurrencies like Cardano’s lower. That is primarily due to a yearlong negative correlation between the greenback and ADA, as shown below.

ff437c2d d804 4c4d b4e5 0937fca9d730 — *ADA and the U.S. dollar index’s weekly correlation coefficient chart. Source: TradingView*

Cardano price prediction for December 2023

Cardano’s pennant structure on the four-hour chart hints at a bullish continuation cycle ahead.

Notably, bull pennants are triangle-like patterns that form during an uptrend. As a rule, they resolve after the price breaks above their upper trendline and rises by as much as the previous uptrend’s height.

In result, ADA’s price is well-positioned to reach $0.81 by year’s end if it breaks out of its bullish pennant to the upside, or around 40% upside over the next two weeks.

23f013fe 74bc 407f 8abf 580d1038b1e3 — *ADA/USD four-hour price chart. Source: TradingView*

Moreover, ADA’s 50-4H exponential moving average (50-4H EMA; the red wave) near $0.528 is also increasing its rebound potential toward $0.81.

Conversely, the bearish scenario includes a decisive break below $0.528 that will risk pushing the price toward the 200-4H EMA (the green wave) near $0.42.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.