Why did Cardano price drop today?
Cardano (ADA) price is down today, down 7.75% in the last 24 hours, hitting $0.55 on December 13.
Let’s discuss the factors driving Cardano prices down recently.
Overbought correction
From a technical perspective, today’s price drop in ADA is part of a correction cycle that began on October 9, when the price of ADA reached an 18-month high of $0.64.
On the short-term charts, traders took profits as Cardano’s Relative Strength Index (RSI) crossed 70 and became “overbought.”
An RSI reading above 70 means that the asset you are trading is overvalued and may experience a trend reversal or downward correction.
ADA is pursuing coordinated pullbacks, which have been identified as limited, range-dependent movement inside the triangle structure. This period reflects market indecision that neither bulls (buyers) nor bearers (sellers) can control.
ADA supply declines in richest addresses
Cardano’s price drop on December 13 coincided with a slight decrease in ADA supply from addresses with balances above 1 million.
Notably, the cohort’s control over ADA supply has increased from 21.62 billion to 21.66 billion as of December. The surge coincides with Cardano’s 50% price rise over the same period, suggesting that this whale has influenced ADA’s short-term price trend, and December 13th is no different.
Cryptocurrency market downturn
The entire cryptocurrency market is correcting from overbought levels, and ADA appears to be reflecting the same pattern. A factor that has increased traders’ selling sentiment is the recent US Consumer Price Index (CPI) data.
In particular, headline inflation in the US fell to 3.1% year-on-year (YoY), in line with forecasts. Meanwhile, core CPI was unchanged at 4% year-on-year. However, month-on-month (MoM) figures rose slightly, with headline and core CPI rising 0.1% and 0.3% respectively.
This suggests the Fed may remain cautious about cutting interest rates in the coming months. There is a 98.2% chance that the U.S. central bank will keep interest rates steady at 5.25% to 5.50% when it meets on December 13, according to CME’s Fed futures rate data.
In the long term, higher interest rates could strengthen the U.S. dollar, which could put downward pressure on the prices of cryptocurrencies like Cardano. This is primarily due to the one-year negative correlation between the dollar and ADA, as shown below.
Cardano price prediction for December 2023
The Cardano pennant structure on the 4-hour chart suggests a sustained bullish cycle ahead.
Related: Bitcoin Price Correction Hints Alt Season Starts, Traders Suggest
Specifically, a bull pennant is a triangle-shaped pattern that forms during an uptrend. It usually resolves after the price crosses the upper trend line and rises by the height of the previous uptrend.
As a result, the price of ADA is well-positioned to break out of the bullish pennant and reach $0.81 by the end of the year if it rises about 40% over the next two weeks.
Moreover, ADA’s 50-4H exponential moving average (50-4H EMA, red wave) near $0.528 is also increasing the chances of a rebound towards $0.81.
Conversely, a bearish scenario would involve a decisive break below $0.528, which risks pushing the price towards the 200-4H EMA (green wave) near $0.42.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.
