With the Federal Reserve hinting at another rate cut in the near future, the cryptocurrency market, including Cardano, is bracing for potential downside. Looking back at May 2019, when the Federal Reserve initiated its first rate cut, Cardano faced a sharp decline of 57%. This drop was followed by a prolonged downtrend until early 2020, with a brief uptrend later in the year. The uncertainty surrounding the link between rate cuts and crypto declines remains, but historical data suggests a correlation in market behavior.
Potential Impact of Current Rate Cut Speculations
Although the specific impact of rate cuts on cryptocurrencies is debatable, there is a notable pattern observed in Cardano’s price movement during the 2019 rate cut. As interest rates are now at 5.33%, significantly higher than in 2019, the potential for a similar, if not more severe, decline in Cardano’s price is a valid concern.
Considering the increasing public debt, which has risen to nearly $35 trillion, and the evolving market dynamics, Cardano could be vulnerable to a prolonged downturn. The upcoming rate cut, based on data from the CME, suggests a possible multi-month decline for Cardano, potentially pushing its price down to $0.15. Additionally, September has historically been a challenging month for both stocks and crypto, adding further pressure on Cardano’s price.
Analyzing Cardano’s monthly Stochastic RSI, MACD, and Visible Range Volume Profile (VRVP) reveals warning signs for ADA’s future performance. The Stochastic RSI and MACD indicators are both signaling bearish trends, with the MACD line already crossing below the signal line. The VRVP indicates weak support levels within the current price range, suggesting a potential further drop in Cardano’s price.
While Cardano currently sits within a macro Fibonacci golden pocket, offering temporary support between $0.2951 and $0.3204, the long-term sustainability of this zone remains questionable. ADA has already fallen below the 78.6% retracement on various Fibonacci levels, casting doubts on the strength of the current support zone.
In light of the potential market conditions and technical indicators, traders may consider a cautious approach towards Cardano. Watching for a possible dead cat bounce before the September 18 Fed meeting and monitoring the price movement below the $0.2951 golden pocket could provide strategic entry points for shorting ADA. Waiting for a more calculated move below $0.2349, a significant support level from previous market conditions, could be a safer approach to navigate the potential downturn in Cardano’s price.
It is essential to note that the information provided in this article is for educational purposes only and should not be considered as investment advice. Traders and investors are encouraged to conduct their research and analysis before making any financial decisions based on the content presented here.
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