Back in 2019, Cardano experienced a significant drop of 57% when the Federal Reserve decided to implement a rate cut. This move by the Federal Reserve led to a series of events that resulted in a bearish trend for Cardano, ultimately causing a major decline in its value. Fast forward to the present, with another rate cut looming on the horizon, Cardano finds itself in a similar vulnerable position. The correlation between Federal Reserve rate cuts and crypto market performance cannot be ignored, as past events have clearly demonstrated the negative impact it can have on cryptocurrencies like Cardano.
Currently, the Federal Reserve is expected to announce another rate cut based on data from the CME. This upcoming decision could trigger a chain of events that mirror what happened back in 2019. If history repeats itself, Cardano could be facing a prolonged period of decline lasting several months, with a recovery not expected until early 2025. Analysts predict that Cardano’s price could plummet to around $0.15 if the market follows a similar trajectory to previous rate cuts. Furthermore, the month of September has historically been challenging for both stocks and cryptocurrencies, with Cardano already experiencing a 10% drop since the beginning of the month. These factors combined could lead to a further downturn in Cardano’s value in the coming weeks and months, potentially breaking below its support line at $0.2349.
Taking a closer look at Cardano’s monthly chart, several technical indicators are signaling a bearish outlook for the cryptocurrency. The Stochastic RSI and MACD are both flashing warning signs, with the SRSI nearing oversold conditions and the MACD showing downward pressure. The Visible Range Volume Profile (VRVP) further adds to the negative sentiment by indicating weak support levels within Cardano’s current price range. If Cardano continues to fall, there may be little resistance to halt the decline until it reaches a strong support zone at $0.15.
While there are concerns about the current support levels, such as the macro Fibonacci golden pocket between $0.2951 and $0.3204, more robust support is seen at $0.2349, a level that has historically held up during bearish market conditions. However, with Cardano currently trading around $0.315, even a drop to the $0.2349 support level would represent a 25% decline, highlighting the vulnerability of the cryptocurrency.
The looming Federal Reserve rate cut poses a significant threat to Cardano’s value, potentially leading to a prolonged period of decline. While there may be temporary relief in the form of a dead cat bounce before the Fed meeting on September 18, the overall trend for Cardano appears bearish in the medium term. Traders are advised to exercise caution and wait for a clear signal, such as a drop below the $0.2951 golden pocket, before considering shorting Cardano. It is essential to remain vigilant and informed in the face of market uncertainties, as the future trajectory of Cardano remains uncertain.
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