Cardano Faces 50% Drop Risk Amid Trade War Uncertainty

Cardano (ADA) price was trading sideways in the $0.62 area on Monday, facing a critical technical juncture. The price action in the coming days will be pivotal for the cryptocurrency's near-term momentum. ADA is currently testing its 21-day moving average (21DMA), a level that has provided consistent resistance in recent weeks. If the price encounters resistance at this level again, it would indicate that bears are still in control, potentially leading to a drop to new lows.

There is a growing likelihood of a 50% drop in the Cardano price, potentially returning to 2024 lows in the $0.30 area. This risk is exacerbated by ongoing macro uncertainties, particularly the trade war between the US and the rest of the world. The confusing headlines surrounding this trade war are contributing to short-term market volatility, affecting ADA and other assets.

Analysts highlight that the trade war is inadvertently undermining the USD's status as the global reserve asset. Consistent US trade deficits have been a key feature of the global financial order, with the USD at its center. Recent macro price moves, including significant selling pressure on the DXY and USD-denominated assets, reflect international investors shifting funds out of the US dollar. Gold has been a significant beneficiary of this shift, and there are signs that Bitcoin might also be gaining traction as a safe haven asset.

However, this environment is not favorable for riskier assets like Cardano. The uncertainty about the global financial order is not conducive to the growth of high-risk cryptocurrencies. The US economy could soon slide into recession, and with the Federal Reserve hesitant to act due to concerns about sticky inflation, now may not be the best time to invest in Cardano. If the situation worsens, a collapse back to 2024 lows in the $0.30 area is possible.

Despite the challenging medium-term outlook, long-term investors might still find value in accumulating ADA. Cardano remains one of the most promising layer-1 projects in the crypto industry. The blockchain recently transitioned to full decentralized governance and is poised to become a leading Bitcoin DeFi side chain in 2025. While ADA is more speculative than blockchains like Ethereum and Solana, which have achieved higher levels of adoption, it has significant upside potential. With a market cap of around $22 billion, compared to $72 billion for Solana and $190 billion for Ethereum, Cardano has room for growth if macro uncertainties clear up.

The Trump administration's pro-crypto stance and favorable policies could support the industry's growth. Once macro uncertainties subside and US liquidity starts to flow again, the Cardano price could experience a major comeback. There is potential for ADA to clear its old record highs above $3.0 in the coming years, representing a 5x rally from current levels.