Cardano's 37% Retracement Signals Bearish Trend

Cardano (ADA) has experienced a tumultuous month, with early gains followed by a significant retracement of 37%, erasing most of its recent upside. Despite broader market indicators suggesting a bullish outlook, technical patterns indicate that this momentum may not be sustainable.

Cardano is approaching a Death Cross, a bearish technical signal that occurs when the 50-day exponential moving average (EMA) falls below the 200-day EMA. Historically, this crossover has often preceded sharp price declines. If confirmed, this would be ADA’s first Death Cross in 10 months, ending the ongoing five-month-long Golden Cross, a bullish pattern that previously supported the asset’s growth. This development could signal further downside pressure for investors.

On-chain data further dampens investor confidence. The MVRV Long/Short Difference, a metric comparing the profitability of long-term holders (LTHs) to short-term holders (STHs), has been declining steadily. Although still in positive territory, its fall suggests that LTHs are seeing their profits shrink. This metric is now at a four-month low, increasing the risk of profit-taking by LTHs. If these investors begin to sell to preserve gains, it could introduce added selling pressure, potentially undercutting any bullish momentum Cardano is attempting to hold onto.

Currently, ADA is trading at $0.71, down 37% from its recent high. The decline has broken its macro uptrend, although the altcoin remains just above the $0.70 support level, which has acted as a key technical barrier. However, the looming Death Cross, combined with fading long-term investor confidence, may push Cardano below this support. If $0.70 is breached, ADA could slip to $0.62, marking a further extension of the ongoing correction phase and reinforcing the bearish outlook.

On the other hand, if Cardano manages to invalidate the bearish thesis, it must rise above $0.77. This would end the current 11-day consolidation phase. A successful breakout could propel ADA toward $0.85, reclaiming some of the lost ground and potentially restoring short-term investor confidence.