Cardano Faces 8% Weekly Drop Amid New Sidechain Launch

The launch of the ‘New ADA’ Midnight sidechain is anticipated to trigger significant volatility in the Cardano ecosystem, potentially leading to a price plunge. This new sidechain is designed to support confidential transactions and data protection, which is seen as a major catalyst for mass adoption within the Cardano network. By introducing new developer tools and enhancing interoperability with other chains, Midnight aims to expand Cardano’s use cases, making it more competitive with other cryptocurrencies like XRP.

Despite the bullish long-term outlook, technical indicators suggest a potential sell-off risk in the near term. The recent bear candle closing below the lower Bollinger Band on the daily chart is a typical sign of short-term overselling. However, Cardano’s bounce from the lower support of a 6-month descending triangle around $0.51 to reclaim the band could indicate seller exhaustion rather than a prevailing downtrend.

Momentum indicators lean towards a bullish case. The Relative Strength Index (RSI) has sharply reversed after dipping below the oversold threshold at 30, suggesting that buyers are stepping in. Additionally, the Moving Average Convergence Divergence (MACD) line is on the verge of a golden cross, preparing to overtake the signal line on the daily timeframe, which is an early sign of an emerging uptrend. If the crossover unfolds, it could solidify the event as a “Bollinger Band buy” reversal signal, setting ADA on a breakout path near the 0.618 Fibonacci level at $0.647.

A decisive move above this level could break the multi-month pattern, setting sights on a technical target 170% higher around the $2.618 Fibonacci extension at $1.4285. However, this bullish outlook hinges on clearing the median resistance of the Bollinger Bands—the 20-day Simple Moving Average (SMA)—which currently caps upward momentum and reflects prevailing bearish pressure.

ADA remains vulnerable to broader market headwinds, with the token down 8% on the week, lagging behind other altcoins as geopolitical tensions escalate. The sell-off risk stems from the daily chart, with a recent bear candle closing below the lower Bollinger Band—a typical sign of short-term overselling. However, with Cardano bouncing from the lower support of a 6-month descending triangle around $0.51 to reclaim the band, it could be a sign of seller exhaustion rather than a prevailing downtrend.

According to the analyst's forecast, if the crossover unfolds, it could solidify the event as a “Bollinger Band buy” reversal signal, setting ADA on the breakout path near the 0.618 Fibonacci level at $0.647. A decisive move above this level could break the multi-month pattern, setting sights on a technical target 170% higher around the $2.618 Fibonacci extension at $1.4285. Still, this bullish outlook hinges on clearing the median resistance of the Bollinger Bands—the 20-day SMA—which currently caps upward momentum and reflects prevailing bearish pressure.