ADA Crypto News: Cardano Could Drop -15% If $0.65 Support Does Not Hold

However, this rebound seems to be a short-lived “dead cat bounce” as ADA is once again in red territory in the past 24 hours, losing 3.7% to stand at $0.703.

Trading volumes have retreated by 21.8% in the past day, possibly as the selling pressure is not as strong as last week’s, at least for now.

ADA started to drop rapidly a day after President Trump included the token in the list of candidates that would supposedly make it to a U.S. digital assets stockpile.

However, the head of state signed an executive order (EO) just a few days after that limited this reserve to cryptocurrencies already owned by the federal government as a result of asset seizures and other similar proceedings.

Despite being the 8^th most valuable cryptocurrency, the Cardano ecosystem is significantly smaller than that of its closest competitor – Solana (SOL). The total value locked (TVL) within the Cardano network currently stands at $325 million.

Meanwhile, only $24.2 million worth of stablecoins currently live in this blockchain. The primary reason for this is that the largest stablecoins like USDT and USDC are not supported by Cardano.

Slow ecosystem growth has been the primary reason why Cardano has underperformed its peers. However, the project’s large market cap of $24.6 billion emphasizes that market participants still believe in its potential.

ADA Could Lose Another 15% if It Drops Below $0.65

Although it took a while, ADA ultimately shed most of the gains linked to this development and it is now struggling to stay above $0.65.

The daily chart shows that the Relative Strength Index (RSI) crossed below the signal line on Monday as the selling spree fully evaporated ADA’s Trump-linked gains.

Meanwhile, momentum indicators are still in negative territory and growing steadily despite Monday and Tuesday’s upticks. This increases the odds that ADA may retest that $0.60 support level in the near term, especially as market sentiment remains heavily depressed.

It is worth noting that ADA is currently outperforming Solana and Ethereum despite not making any progress in terms of ecosystem growth. The market may soon close this gap unless the project makes meaningful progress on this front.

Americans Sold Off ADA but Price Action Has Hit a Key Support

The hourly chart shows that a double-top pattern is now in play as ADA failed to make a higher high during the Monday-Tuesday bounce. The market interprets this as a sign of weakness as buyers did not manage to reverse the downtrend.

Now, the price action is retesting the $0.695 level and this price point offers an interesting opportunity to traders depending on what the price does next.

If ADA drops below that level, a short position with an exit target at $0.650 and an entry price at around $0.690 (after a bearish breakout is confirmed) offers a decent 1.7 risk-reward ratio.

On the other hand, if the market bounces off this level, the upside potential would be even higher if ADA retests its most recent lower high at around $0.74. In this case, at current levels, this long position would offer an RR ratio of 2.

As volatility subsides, stop-loss orders can be tighter than usual. However, as sentiment gauges stand at heavily depressed levels, if buyers perceive that the market is getting close to a bottom, this could trigger a buying spree at any point.