Cardano Price Drops 5.35% Amid Bearish Chart Patterns and Weakening On-Chain Activity

Cardano, a prominent cryptocurrency, is currently under significant pressure as bearish chart patterns signal potential further losses. The price of Cardano (ADA) has declined to $0.584 following two days of gains, reflecting broader market sentiment across the crypto sector. Although this shows a short-term recovery, ADA is once again under bearish pressure due to the technical indicators and network activity, as there may still be some downside to go.

On the daily chart, Cardano peaked at $0.863 on May 12 and has since retraced. The asset is forming an inverse cup-and-handle pattern, considered a bearish continuation signal. The pattern’s upper boundary lies at $0.863, with support at $0.519. Currently, the price is in the handle phase, which typically precedes a decline. Based on the pattern’s height of $0.344, a breakdown below $0.519 could send ADA to $0.179.

One additional important signal appeared on June 4, when the 50-day exponential average moved below the 200-day EMA. This death cross can be considered the beginning of the long-term decline. ADA has been below the 200-day EMA, and it currently serves as a resistance line at $0.703.

Other than price action, Cardano's on-chain developments are also weakening. The use of the app daily has fallen to just 20,000 in June compared with 54,400 at its peak last year. This steady drop raises concerns of deteriorating interest among users in the platform. The total number of monthly transactions has also dropped to 619,000, marking a yearly low. In addition, Cardano’s chain fees fell to $146,000 in the last 30 days, a steep decline from $978,000 in December. Cardano’s futures market has also cooled off, with open interest falling to under $822 million. This marks a $678 million decrease from this year’s high of $1.5 billion, indicating lower speculative demand.

Daily active users on the Cardano blockchain have dropped over 60% since last year, reflecting slowing network usage. Cardano’s futures market and chain fees have sharply declined, signaling weakening investor interest and user activity. The bearish sentiment is further reinforced by the hourly chart analysis, which shows that ADA's price is more bearish than bullish. The rate is closer to the support level, which is a concerning sign for investors. Additionally, the price of ADA fell below $0.620 on Monday, posting a 5.35% daily loss. This decline is part of a broader bearish momentum that has been affecting the cryptocurrency market.

Multiple technical indicators have flashed bearish signals, contributing to the pressure on ADA. The Relative Strength Index (RSI) is in the neutral zone, with no indications of a robust buying pressure recovery. This lack of buying pressure, combined with the bearish chart patterns, suggests that the downward trend may continue. The alignment between rising volume and falling price often reflects a strong bearish sentiment, reinforcing the downward pressure seen on the chart.

The bearish pressure on Cardano is not an isolated incident but part of a broader trend affecting the cryptocurrency market. Other cryptocurrencies, such as NEAR Protocol, have also experienced significant declines. NEAR Protocol plummeted by 30% in a month amid weak on-chain activity, indicating a lack of investor confidence in the market. This broader market sentiment contributes to the bearish outlook for Cardano.

Investors and traders should be cautious as the bearish pressure appears to be mounting. The lack of strong reversal signals and the continued downward trend suggest that the market may remain bearish in the near term. Traders should closely monitor the technical indicators and chart patterns to identify potential support levels and reversal signals.