Cardano Price Forecast: ADA Slips Below $0.36 as Trade Tensions Weigh on Sentiment

Cardano (ADA) fell 3% on Monday, trading below $0.36 after failing to hold a key support level the previous day. The price correction was further fueled by rising trade-war tensions between the European Union (EU) and the United States of America (US). Momentum indicators and derivatives markets suggest further correction, as bearish signals intensify and funding rates turn negative.

Cardano began the week on a negative note, extending its decline after dropping 5.41% in the prior day. The escalating trade tensions between the US and the EU are dampening broader market sentiment and weighing on risky assets, wiping out over $800 million in liquidations. U.S. President Donald Trump announced 10% tariffs on goods from eight European nations starting February 1, unless the US is allowed to buy Greenland.

In response, EU capitals are considering retaliatory measures, including imposing tariffs or restricting American companies' access to the bloc's market. These growing trade tensions triggered risk-off sentiment among traders, which does not bode well for risky assets such as Cardano.

What Are Analysts Watching Next?

Coinglass's OI-Weighted Funding Rate data shows a bearish bias in the derivatives market, with the number of traders betting that the price of ADA will fall higher than those anticipating a price increase. The metric has flipped to a negative rate, reading -0.0079% on Monday, the lowest level since December 10. This negative rate, indicating shorts are paying longs, suggests bearish sentiment toward ADA.

Cardano's price was rejected from the 50-day Exponential Moving Average (EMA) at $0.41 on Wednesday and declined nearly 7% the next day. On Friday, ADA retested the daily support at $0.38 and rebounded slightly the next day. However, Cardano corrected more than 5% and closed below this support level on Sunday, trading around $0.36.

How Did Markets React?

The Relative Strength Index (RSI) on the daily chart reads 40, below the neutral level of 50, indicating bearish momentum gaining traction. The Moving Average Convergence Divergence (MACD) indicator showed a bearish crossover on Sunday, further supporting the negative outlook. If ADA continues its correction, it could extend the decline toward the December 31 low of $0.32. A close below this level could extend the pullback toward the October 10 low of $0.27.

Cardano's derivatives market shows a bearish bias, with Coinglass's long-to-short ratio standing at 1.33 on Tuesday, the highest level in over a month. The ratio above one suggests that more traders are betting on the Cardano price to rally. However, Cardano's funding rates turned negative on Tuesday, indicating shorts are paying longs, which suggests bearish sentiment toward ADA.

What Are Analysts Watching Next?

If ADA closes below its daily support at $0.38 on a daily basis, it could extend the decline toward the December 31 low of $0.32. The RSI on the daily chart is flattening around the neutral level of 50, indicating indecision among traders. Moreover, the MACD lines are converging, further suggesting an indecisive view.

However, if the daily support at $0.38 holds, ADA could recover toward the 50-day EMA at $0.41. The technical outlook suggests that ADA remains in a consolidation phase, with traders closely watching for a breakout to determine the direction of the price movement.

Cardano's social dominance refers to the share of ADA-related discussions in the cryptocurrency media, which supports a bearish case. Santiment's data indicates that ADA's share is 0.037%, the lowest level since early December and has been falling since early January. This decline indicates waning investor attention and reduced speculative interest, often coinciding with softer demand and weaker near-term price momentum.