TLDR
- Cardano (ADA) is showing signs of potential recovery with a morning star pattern forming, suggesting a possible bounce to $0.73
- ADA is currently trading around $0.67, battling to hold key support levels after a recent decline
- Technical indicators show critical resistance at $0.73, with potential upside to $0.92 if broken
- Cardano’s network fees dropped from $977k in December to $316k in March, indicating decreased ecosystem activity
- Despite weak fundamentals, Elliott Wave analysis suggests ADA could eventually reach $2, representing a 190% increase
Cardano (ADA) showing early signs of a potential recovery.
Currently trading at $0.67, the price has stabilized after experiencing a recent dip. Technical analysts have identified the formation of a morning star pattern on the daily chart, suggesting that bulls may be regaining control of the market.
The price recently declined by approximately 10% over the weekend, forming three consecutive bearish candles.
However, the appearance of a Doji candle indicated a slowdown in the downtrend. This was followed by a bullish candle, completing the potential morning star pattern that typically signals a reversal.
Support for ADA currently sits around the $0.60 level, which coincides with the 50% Fibonacci retracement. This level has proven to be a strong foundation for the price in recent trading.
Key Support and Resistance Levels
Cardano faces a crucial resistance near the $0.73 mark, which aligns with the 61.80% Fibonacci level. The 200-day Exponential Moving Average (EMA) is also approaching this resistance, adding to its importance as a pivot point for future price action.
If ADA successfully breaks through the $0.73 resistance, the next target could be the 78.60% Fibonacci level around $0.92. This would represent a substantial gain from current levels.
On the downside, if Cardano fails to maintain support at $0.60, the next key support zone lies at the 50% Fibonacci retracement level near $0.53. This would represent a downside risk of nearly 20%.
The 50-day and 200-day EMA lines are nearing a potential “death crossover,” which could signal a bearish trend if the price fails to reclaim the $0.73 resistance soon.
Declining Network Activity
Behind the price action, Cardano’s ecosystem shows concerning trends. Network fees have fallen to $316,000 in March from $330,000 in February, continuing a steady downtrend from the peak of $977,000 in December last year.
This decline in fees indicates slowing network activity, which could be a warning sign for investors focused on fundamentals.
App revenue on the Cardano blockchain has experienced an even more dramatic decline. All decentralized applications (dApps) on the Cardano ecosystem generated just $26,000 in March, down from $400,000 in December.
Many projects within the Cardano ecosystem have seen substantial capital outflows. Minswap’s assets dropped by 20% to $81 million, while other projects like Liqwid, Indigo, Splash Protocol, and Lenfi lost over 40% of their assets.
These metrics stand in stark contrast to other blockchain networks. Base, a layer-2 network developed by Coinbase, generated over $20 million in fees during March. Even Sonic, a relatively new blockchain that rebranded from Fantom, produced over $200,000 in fees during the same period.
The weak ecosystem performance has led some critics in the cryptocurrency industry to refer to Cardano as a “ghost chain” compared to more active layer-1 networks like Solana and BNB Chain.
Long-term Price Outlook
Despite these weak fundamentals, some technical analysts remain optimistic about Cardano’s long-term price potential. Elliott Wave analysis suggests that ADA is currently in the second bearish phase of the pattern, which is typically characterized by a pullback.
According to this analysis, Cardano may soon enter the third phase, which is usually bullish and the longest phase of the pattern. If this analysis proves correct, ADA could eventually reach $2, which coincides with the 38.2% Fibonacci Retracement level. This target represents a potential 190% increase from current prices.
In the immediate term, cryptocurrency analyst Ali Martinez has expressed concerns about downside risks if Cardano fails to reclaim the critical support between $0.70 and $0.80. If these levels remain out of reach, the price could continue its downward trend, possibly testing lower levels between $0.31 and $0.24.
The broader cryptocurrency market remains under pressure due to macroeconomic factors including inflation fears, central bank policies, and global financial uncertainty. These external pressures continue to weigh on alternative cryptocurrencies like Cardano.
The next few days will be crucial for ADA as it tests key resistance levels. Traders and investors should closely monitor the $0.73 level to gauge whether Cardano can sustain a bullish reversal or if further downside is likely.
