Back in 2019, Cardano faced a significant drop of 57% when the Federal Reserve initiated its first rate cut, lowering rates from 2.42% to 2.39%. This resulted in a prolonged downtrend for the cryptocurrency that lasted until early 2020. Fast forward to today, with interest rates standing at 5.33% and the public debt skyrocketing to nearly $35 trillion, the stage is set for a potential repeat of history. The correlation between rate cuts and crypto declines cannot be ignored, making the upcoming Federal Reserve meeting a crucial event to monitor for Cardano investors.
September has historically been a challenging month for both stocks and cryptocurrencies. With Cardano already experiencing a 10% drop since the beginning of the month, coupled with the looming rate cut, further downside could be on the horizon. The possibility of a multi-month decline, similar to the 2019 pattern, could see Cardano’s price plummet to around $0.15, a troubling prospect for holders and traders alike.
Taking a longer-term view, Cardano’s monthly Stochastic RSI and MACD are presenting warning signs that should not be underestimated. The Stochastic RSI, in particular, has been on a downward trajectory since March 2024, nearing oversold conditions. The MACD is also signaling bearish sentiment, with the line crossing below the signal line and the histogram trending towards a red flag. Additionally, the Visible Range Volume Profile (VRVP) indicates weak support within the current price range, with a notable volume bar at the $0.15 level, suggesting a potential strong support zone.
Despite the bearish signals, Cardano currently sits within a macro Fibonacci golden pocket ranging from $0.2951 to $0.3204, which has been acting as a temporary support level. However, Fibonacci retracements from different points have shown ADA falling below the 78.6% retracement on all occasions, casting doubt on the strength of the golden pocket in the long term. A more robust support level lies at $0.2349, a line respected during the 2022 bear market, but a drop to that level would still represent a 25% decline from the current price of $0.315.
In the coming weeks, a dead cat bounce may precede the September 18 Federal Reserve meeting, offering a potential short-term uptrend before a more prolonged downturn ensues. A cautious approach would involve waiting for Cardano to dip below the $0.2951 golden pocket before considering shorting positions, as this could provide a safer entry point. The possibility of a continued downtrend until the Fed eases up on rate cuts underscores the need for strategic decision-making in navigating the volatile crypto market.
While the future remains uncertain for Cardano amidst looming rate cuts and market fluctuations, it is essential for investors and traders to stay informed, analyze technical indicators diligently, and adapt their strategies to anticipate potential scenarios. The interconnectedness of traditional finance and cryptocurrencies underscores the importance of monitoring macroeconomic events and their impact on digital assets like Cardano. As always, it is recommended to conduct thorough research and exercise caution when making investment decisions in the crypto space.
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