Why is the price of Cardano down today?
Let's take a look at the reasons why Cardano has been trading low lately.
Extended correction from overbought conditions
From a technical perspective, ADA's continued correction is part of a correction cycle that began after ADA reached a 20-month high of $0.68 in mid-December.
Traders booked profits as the ADA Relative Strength Index (RSI) became overbought after crossing 70 on daily charts.
An RSI reading above 70 means the asset is overvalued and may be experiencing a trend reversal or correction reversal.
ADA is following a corrective reversal, evidenced by activity in a descending parallel channel.
The Relative Strength Index (RSI) is set at 40, which indicates a bearish market situation.
Reduce the amount of major developers and marketing
Starting in mid-December, ADA's price drop coincides with the token's trading volume and the number of major developers.
Notably, the number of unique GitHub users who made more than one pledge per day for the blockchain public GitHub repository fell to 123 on December 10, 2023, from a three-month high of 164 developers on January 18. This represents 25% down.
Transaction volume fell 87 percent from approximately $2.34 billion to $304 million over the same period.
According to additional data from CoinMarketCap, ADA's daily trading volume decreased from approximately $1.165 billion on December 10, 2023 to $381 million on January 18.
The decline in transaction volume and a 27% drop in ADA prices by major developers coincided in the same period, suggesting that parameters have influenced ADA's short-term price trends – and January 19 was no exception.
Related: Price Analysis 1/15: SPX, DXY, BTC, ETH, BNB, SOL, XRP, ADA, AVAX, DOGE
The collapse of the broader crypto market
The entire crypto market is correcting from the highs when the ETF is approved and the ADA seems to be mirroring the same pattern. Factors that boosted traders' selling included a decline in the Crypto Fear and Greed Index and Bitcoin ETF-led selling.
In particular, Bitcoin has recently experienced significant selling pressure, with the price of BTC falling to $40,000 on January 12. This is related to the high flows of Grayscale Bitcoin Trust (GBTC), which is probably a reflection of the investors who chose to enter. Bitcoin ETFs with low fees. When Bitcoin went down, the entire crypto market went down, with major altcoins like ADA collapsing.
The Crypto Fear and Greed Index slipped from the “Greed” zone last week to “Neutral” on January 19.
A decline in bullish market sentiment may be responsible for the current market-wide correction. A “neutral” value means that market participants tread carefully as they wait to see the direction the market will take in the short term.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
