Key Insights:
- ADA was rejected at the top of a descending channel and now risks falling to $0.63 or $0.54 if pressure continues.
- Cardano’s funding rate is negative at -0.0017%, signaling bearish sentiment across futures markets.
- Daily active addresses on Cardano dropped to 21,600, marking a continued decline in network usage.
Cardano price showed bearish formation regarding price patterns and on-chain data after a failure to hold a key level. Traders are now wondering whether ADA may further decline to $0.54 soon.
Cardano Price Rejection at Descending Channel Resistance
Cardano price faced rejection at the upper boundary of its descending channel at $0.74. This level serves as both a key resistance point and a former support level.
Crypto analyst Ali Martinez’s ADA/USDT chart shows a pattern of lower highs and lower lows since February. This formation has kept the ADA in a bearish trend. Notably, this rejection also confirmed that the channel is a technical guide with an upper limit as the barrier.
After the rejection, Cardano price fell by more than 5% and is currently trading at around $0.64. Consequently, continued selling pressure may likely target the $0.63 and $0.54 levels.
These price levels correspond to the 0.5 and 0.382 Fibonacci levels and the middle and lower Bollinger bands. A break below $0.63 may lead to a decline towards $0.54, which may act as the lower channel.
Negative Funding Rate Reflects Bearish Futures Market Sentiment
Moreover, the Cardano futures market showed that most traders are bearish and anticipate more selling. As per Coinglass data, the OI-Weighted Funding Rate for ADA stood at -0.0017 %.
This suggested that short positions were more prevalent, and bearish traders were funding those bullish to hold long positions. Hence, this shows traders and investors have a bearish sentiment towards the market.
Notably, funding rates keep the perpetual futures price in sync with the spot price. When funding is negative, most traders anticipate a price decline for the digital asset.
Lower funding rates, the decline in spot prices, and technical selling strengthen the bearish sentiment on the Cardano price.
Cardano Network Usage Continues Declining
Besides the price chart and futures data, ADA on-chain data showed that user activity has stagnated. Daily Active Addresses, tracked by Santiment and Coinglass, have declined since March.
On May 6, the figure was at 21,600, which meant that fewer unique addresses were active on the blockchain
Lower network activity typically suggests reduced demand or interest in a protocol’s services. For ADA, this trend limits the chances of organic price growth. Without bullish catalysts, its upward momentum remains uncertain.
The decline in user participation coincided with the crypto’s ongoing price correction and contributed to the broader bearish outlook.
Momentum Indicators Show Weakness Ahead of Support Retests
Moreover, momentum tools add further confirmation to the bearish setup. The Relative Strength Index (RSI) on the daily chart reads 46, falling below the neutral 50 level.
This points to waning buying pressure and suggests the potential for further losses. In addition, the MACD indicator formed a bearish crossover on May 5, providing a technical sell signal.
Furthermore, Cardano price failure to close above the $0.746 resistance on April 24 initiated a more than 8% correction. If the price drops below $0.63, it may find support at the April 22 low of $0.615.
A stronger bearish momentum could push it further toward $0.54. Until ADA reclaims key resistance levels, the current trend remains downward.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
