TLDR
- Cardano (ADA) experienced a temporary 13% price jump to around $0.63 on Wednesday as trade war concerns eased
- Technical indicators suggest a bearish trend with a “Death Cross” formation as the 200-day EMA crossed above the 50-day EMA
- ADA is currently hovering around $0.57, with analysts warning it could drop below $0.50 to potentially $0.40 in the near future
- Long-term holders are approaching losses as shown by the MVRV Long/Short Difference dipping below the neutral line
- A potential collaboration between Ripple and Cardano is in development, though its impact remains uncertain
Cardano (ADA) saw a brief 13% price jump on Wednesday, reaching $0.63 as US President Trump announced a 90-day pause on implementing new tariffs for some countries. This rally came after ADA hit lows of around $0.50 earlier in the week, representing a 23% bounce from its Monday bottom.
The temporary respite came as Trump eased trade tensions with several nations. However, he simultaneously increased tariffs on Chinese imports to 125%, citing “lack of respect that China has shown to the world’s markets.”
Market observers note that cryptos and stock markets had become oversold at the start of the week, creating conditions ripe for a bounce. Trump’s partial withdrawal from tariff threats provided the catalyst traders needed to close shorts and for dip buyers to return.
But the question remains: is this the start of a sustainable recovery or just a temporary relief?
Technical Analysis Shows Warning Signs
Despite the midweek rally, technical indicators paint a concerning picture for Cardano. The formation of a “Death Cross” – where the 200-day exponential moving average (EMA) crosses above the 50-day EMA – signals the potential end of ADA’s five-month bullish momentum.
This bearish crossover typically precedes further price declines and suggests waning investor confidence. The Death Cross is considered a classic technical signal that often indicates a shift to a more cautious market outlook.
ADA remains in an overall downtrend and still trades substantially below all of its major moving averages. The price structure on the 4-hour chart shows lower highs and increasingly weaker bounces since late March, reinforcing the bearish outlook.
Technical analyst RLinda highlights $0.581 as a key trigger level. If ADA fails to hold this support, which has served as a confluence area multiple times this cycle, a further breakdown could follow.
Price Targets and Support Levels
Cardano is currently holding at around $0.57, maintaining position above the critical support of $0.54. However, this support represents the last defensive line before ADA potentially drops below $0.50.
If the current bearish trend intensifies, analysts suggest ADA could fall through the $0.50 support, possibly extending losses toward $0.46. Some projections see potential drops to $0.42 or even $0.40 if market sentiment doesn’t improve.
The next key support after $0.581 lies at $0.5092, but analysts don’t expect this level to provide significant resistance to downward pressure. If breached, some warn of a potential plunge into what’s described as a “zone of emptiness” where buying pressure might become non-existent.
Investor Sentiment Shifting
Beyond technical patterns, investor sentiment indicators also suggest trouble ahead. The MVRV (Market Value to Realized Value) Long/Short Difference has dipped below the neutral line, indicating that long-term holders are verging on losing their profits.
If this trend continues, the profitability advantage could shift from long-term holders to short-term holders, potentially intensifying selling pressure. With long-term investors seeing their profits evaporate, there’s little incentive for them to maintain their positions.
This shift in sentiment comes despite earlier hopes that Cardano would benefit from the pro-crypto Trump administration. These expectations haven’t materialized – Cardano hasn’t been selected as the blockchain to run Treasury payments, and co-founder Charles Hoskinson didn’t join Trump’s circle of crypto advisors.
Yet ADA’s price still remains approximately double its pre-Trump election victory levels, suggesting potential for further correction.
Macro Factors at Play
The broader economic environment remains challenging for risk assets like Cardano. Persistent inflation concerns, which could increase further as tariff effects spread, and a robust labor market prevent the Federal Reserve from easing monetary policy to support markets.
CPI data expected later this week could further strengthen the case for the Fed to maintain current rates. Money markets currently price in 100 basis points of easing by year-end, according to the CME’s Fed Watch Tool, but hot inflation data could disappoint markets and hurt risk appetite.
US Treasury markets continue to send concerning signals, with the 10-year yield jumping 45 basis points from earlier weekly lows to around 4.30%. With US long-dated yields still above 4.0%, investors may be disappointed by the lack of downside in bond yields despite recent stock market corrections.
Potential Developments to Watch
One notable development on the horizon is a potential collaboration between Ripple and Cardano. Details remain scarce, but this partnership could potentially influence ADA’s price trajectory, though analysts remain cautious about its impact.
For ADA to reverse its bearish outlook, it would need to secure $0.57 as a support floor and break above $0.63 to restore investor confidence. This could help avoid further losses and provide a path for recovery.
The crypto market remains highly sensitive to broader economic forces, as demonstrated by recent volatility triggered by conflicting reports about a supposed 90-day US tariff suspension. These rumors, which the White House quickly denied, were enough to push Bitcoin down to $74,620 and Cardano to $0.54.
While ADA has managed a mild recovery since then, the bounce lacks conviction. The thin trading volume and absence of aggressive buying suggest the relief may be temporary, with possibilities of further downside moves in the coming days and weeks.
