Cardano (ADA) price is at risk of a severe correction in the coming months despite touting the growth of its blockchain network and a “major” hard fork event in June.
A descending channel suggests a big drop is coming for ADA price
ADA, which represents around 1.75% of the total cryptocurrency market capitalization, has been trending down since September 2021, within a “falling channel” pattern that has successfully capped its multiple attempts to the upside, such as illustrated in the graph below.
The channel showed more strength when ADA broke above its upper trend line on March 27, only to completely reverse on subsequent trading days, showing a lack of conviction among Cardano bulls.
The ADA 200-day exponential moving average (200-day EMA – the blue wave) coupled with the 0.236 Fib line (near $1.29) on the Fibonacci retracement chart, drawn from the $2.96 high to low of $0.78, further helped the bearish bias.
As of Apr 15, ADA price is consolidating within the $0.97-$0.92 range, signaling the intention to continue its pullback from its false high near $1.25.
If the descending channel setup continues, the ADA/USD pair could drop to its previous range bottom near $0.78, while watching the lower trendline of the channel around $0.65 as its main downside target.
That represents a drop of almost 30% compared to the current price.
Cardano Network Growth Fails To Impress Traders
Meanwhile, Input Output Hong Kong (IOHK), the research and development company behind the Cardano project, has announced an incredible growth of the network in early April 2022.
Stablecoins, sidechains, NFTs & partnerships, launchpads & project launches, converter bridges…getting overwhelmed with all the news from the #cardano universe?
We’ve gathered a structured recap of the key updates over the last 10 days.
Here’s what’s happening
$ADA— Input Output (@InputOutputHK) April 12, 2022
IOHK also appears to be preparing the “Vasil” hard fork, a network upgrade to make the Cardano blockchain more scalable, for sometime in June.
Cardano founder Charles Hoskinson highlighted the word “important” five times when describing the fork’s relevance to the overall growth of the network in a video posted on April 12, a day after the ADA price crashed. more than 10%.
Yes, ADA price rallied after Hoskinson’s comments and IOHK’s tweets. But the rebound has lost momentum and tends to show a flat move, being influenced by macro factors.
Notably, like Bitcoin, ADA’s correlation to the Nasdaq-100 (NDX) hit a record high, hitting 0.97 on April 15, up from 0.79 earlier in the year.
In other words, ADA’s price is currently in parallel with the tech index, which has shed over a trillion dollars from its market capitalization in April.
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