Cardano (ADA) Faces Potential Decline Amid Death Cross Threat and Shrinking Long-Term Holder Profits

• Cardano (ADA) has experienced significant volatility this month, plunging 37% and facing critical technical indicators that suggest further declines.

• The market sentiment is increasingly cautious as the MVRV Long/Short Difference signals narrowing profits for long-term holders, raising alarms about potential profit-taking.

• As ADA grapples with support around $0.70, analysts are closely watching for a potential move to $0.62, emphasizing the critical nature of these price levels.

This article explores Cardano’s recent price action and impending technical signals, aiming to provide investors with insights on potential future movements.

Cardano’s Technical Indicators Signal Further Potential Losses

In the volatile world of cryptocurrencies, Cardano’s recent downturn seems particularly significant as it approaches a Death Cross, a traditional bearish indicator. This technical pattern is characterized by the short-term 50-day exponential moving average (EMA) dropping below the long-term 200-day EMA, suggesting a strong downward momentum. Historically, such crossovers have preceded sharp declines in asset value.

If confirmed, this would represent Cardano’s first Death Cross in ten months, marking a stark end to a five-month period characterized by a Golden Cross. This prior pattern had fostered optimism among investors, but the current scenario casts a shadow over potential price recovery.

All these factors indicate that investor sentiment is shifting, with many viewing the Death Cross as a cue for potential sell-offs and a challenging environment for further price appreciation.

Cardano EMAs. Source: TradingView

On-chain metrics also indicate a declining trend in investor confidence. The MVRV Long/Short Difference—a vital statistic assessing the profitability of long-term investors relative to short-term holders—has seen a consistent downward trajectory. Currently, this metric has descended to a four-month low, suggesting that long-term holders are experiencing shrinking profits. This could signal an increase in profit-taking activities if the trend continues.

Cardano MVRV Long/Short Difference. Source: Santiment

ADA’s Price Action and Key Support Levels

As of the latest trading sessions, ADA is positioned at $0.71, reflecting a significant drop from its recent highs. The altcoin has broken its macro uptrend, yet currently hovers just above the critical $0.70 support level, which has historically served as a safeguard against further declines.

The prevailing sentiment linked to the impending Death Cross and declining confidence appears poised to challenge this support level. A break below $0.70 could see prices slide down to $0.62. Such a move would be perceived as an extension of the current correction phase, underscoring a bearish outlook for the asset.

Cardano Price Analysis. Source: TradingView

Conversely, should Cardano overcome these bearish predictions, it must breach the $0.77 resistance to signal a shift in momentum. Achieving this price point would indicate the end of the 11-day consolidation phase, potentially propelling ADA up towards $0.85. This revival could reassure short-term investors and help restore some of the confidence that has waned in recent weeks.

Conclusion

The landscape for Cardano appears increasingly challenging as it faces critical technical indicators and diminishing investor confidence. With key support at risk and the potential for further price declines, investors should remain vigilant and consider both on-chain metrics and technical patterns moving forward. A decisive move above $0.77 could signify a shift in market psychology, but until then, the outlook remains cautiously pessimistic.