Cardano Faces 31% Drop Risk as SEC Delays ETF Decision
1min read Cardano (ADA) is currently facing significant uncertainty, as highlighted by a prominent analyst. The delay in the Securities and Exchange Commission's (SEC) decision on the Canary Capital ADA exchange-traded fund (ETF) has added to the market's volatility, dampening expectations of an imminent influx of institutional investment into Cardano.
Dan Gambardello, a well-known cryptocurrency analyst, has expressed concern over ADA's price stability. In his analysis, he noted that Cardano is at a critical juncture, with its price hovering around the 200-week moving average (MA), positioned between $0.73 and $0.74. This level is crucial for long-term price trends, and sustaining a position above it would reinforce bullish momentum. However, failure to hold this support level could indicate increased downside risks.
Ask Aime: What is the impact of the SEC's delay on Cardano's price stability?
Gambardello compared ADA's current price movement to patterns observed during the 2021 bull run, where the asset fluctuated between the 50-week ma and the 20-week MA before experiencing a breakout. Despite this historical precedent, he cautioned that there is no certainty ADA will replicate past performance. One major external factor that could influence its short-term trajectory is the Federal Reserve’s stance on interest rates. If the Fed does not meet market expectations for rate cuts, cryptocurrency prices—including ADA—could experience further volatility.
Gambardello outlined two possible outcomes for Cardano’s price action. In a bearish scenario, where ADA fails to maintain support at the 200-week MA and macroeconomic conditions exert additional pressure, the asset could decline toward $0.50. This would represent a 31% decrease from its current price of $0.73. On the other hand, a more optimistic outlook would require ADA to not only hold the 200-week MA but also break above key resistance levels. Specifically, he highlighted the 20-day MA at $0.78 and the 50-day MA at $0.80 as critical thresholds. A successful move beyond these levels could set the stage for a rally toward $1.25, which he refers to as the “upper boundary of the bull market range.”
The anticipation of an ADA ETF has been a significant driver of optimism within the Cardano community. Institutional investment could provide much-needed liquidity and stability for ADA, potentially strengthening its long-term value. However, the SEC’s decision to delay its ruling suggests regulatory hurdles remain a key challenge. While investors await further developments, the broader crypto market continues to react to macroeconomic shifts, regulatory decisions, and market sentiment.
