What you need to know
What caused Cardano to drop by 20% in just 24 hours?
Increased volatility and pressure to sell were a result of a shift towards scepticism in the market and if it fell below important EMAs.
Can ADA recover from its current level in a short time?
If buyers defend the $0.6671 support zone, ADA could potentially stabilize and retest the $0.70–$0.75 range.
Cardano[ADA]’s price has dropped by over 20% in the last 24 hours as a bearish mood sweeps the altcoin markets.
The steep correction has flipped ADA’s market structure to bearish, with the token now trading below both its 50-day and 100-day Exponential Moving Averages (EMAs) — a technical sign that sellers currently have the upper hand.
Market Structure Turns Bearish
A recent breakdown below the key EMAs is a sign of a trend reversal in short-term after weeks range bound consolidation and a steadily bullish run.
The rapid drop in ADA has also brought it closer to the critical zones of liquidity, causing a rise in market volatility. Traders are reassessing their positions.
TradingView
The sharp drop in price has filled an important market imbalance at $0.6671. This could be a temporary support level, if the buying pressure returns.
Could bulls help defend the area?
ADA’s funding rates and futures activity present a cautious image.
Messari weighted data on funding rates highlights an increasing pressure by derivatives traders.
In recent weeks, funding rates have fallen across all major exchanges. Most traders now bet on a price decline in the short term.
Source: Messari
CryptoQuant’s Cumulative Volume Delta Data, in addition to Fading Rates data, indicates a rising seller dominance both on Spot and Futures Markets.
Cardano long positions still outnumber shorts, at least for the moment.
Source: CryptoQuant
Trading volumes are not in line with ADA’s recent price movement. This divergence portrays the rallying as a manipulation of impulse movements that may be headed for a short-term correction.
After resolving the imbalances on the market, the support level of $0.6671 could help buyers and financial institutions chip in to boost the token’s bullish momentum.
Source: Messari
Can the situation be reversed?
Bulls may soon try to defend imbalance zones, despite the cautious outlook.
These levels were historically areas for accumulation by long-term traders looking to take advantage of the discounted price. If buyers step in to absorb the selling pressure, ADA could stabilize and potentially retest the $0.70–$0.75 range.
At press time, however, near-term momentum was still tilted towards the bears.
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Source: ambcrypto.com
