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Cardano struggles below key support levels, with analysts noting potential risks and a possible recovery phase.
Cardano’s recent price action has sparked significant attention, especially after testing the $0.3680 resistance level on October 7. Despite an attempt to break higher, ADA has faced a notable decline, similar to Bitcoin and Ethereum.
The crypto formed a short-term top, followed by a fresh downturn, slipping below key support levels at $0.3550. This downward momentum aligns with a broader trend observed in the broader market.
Potential Risks for Cardano
A TradingView analyst known as Siyamakbayrami provided insights into Cardano’s price movement, highlighting a descending weekly trend. The analyst’s chart illustrates a sharp uptrend leading to ADA’s peak of approximately $0.80 in March.
However, a significant correction followed, erasing most of those gains. As a result, ADA entered a consolidation phase, trading within a narrow range of $0.33 to $0.45. This range reflects a period of market indecision, often seen as a crucial turning point for assets.
According to the analyst, if Cardano fails to maintain its current support at $0.33, the next significant support level could be between $0.22 and $0.26.
Notably, Cardano was last seen in this range in 2023. Essentially, the analyst is projecting a severe price crash for ADA that could erase all gains accrued since the beginning of the year. At press time, ADA is trading at $0.3385, down by 1%.
Holder Sentiment and Resistance Levels
In addition to technical analysis, the Global In/Out of the Money analysis sheds light on the sentiment of Cardano holders. The data shows that 77.50% of addresses holding ADA are out of the money, having purchased at prices above $0.33.
As a result, any rise in ADA’s price could face selling pressure from these holders, especially as it approaches key resistance levels between $0.35 and $0.54. The potential for resistance in these zones is high, as many holders may seek to exit their positions to recover losses.
Analyst Predicts Recovery
Separately, crypto analyst Ali Martinez expressed that Cardano investors are in the depression phase of the market cycle. This stage, marked by pessimism and negativity, may present a unique buying opportunity.
Historically, the depression phase often signals market bottoms. Martinez points out that while sentiment is low, this phase precedes a potential rally. Investors who accumulate during these downturns could benefit from a recovery as the market transitions into a disbelief phase.