Cardano (ADA) experienced a significant upswing in March, reaching a year-to-date high of $0.4622. Excitement spread among ADA investors as the price climbed, but unfortunately, it was short-lived. The price faced rejection at that level, causing ADA to plummet to the $0.3760 support level.
However, despite this setback, ADA managed to find some stability as the bulls defended this crucial support level. Throughout May, the price of ADA fluctuated above and below the support level, giving hope to investors.
However, the tides turned in June when intense selling pressure gripped the market. ADA, like many other altcoins, found itself caught in the aftermath of regulatory issues with its supposed security label. The market sentiment turned bearish, and altcoins suffered significant losses as a result.
ADA Not A Security: Gensler Once Again Getting Ahead of Himself #Cardano #cardanofeed #ADA #crypto #cardanocommunity #bitcoin #CoinMarketCap #blockchain #cryptocurrency #CardanoADA #btc $ADAhttps://t.co/cwM1SD0Brm
— Cardano Feed ($ADA) (@CardanoFeed) June 14, 2023
Now, the question arises: What lies ahead for ADA as the bearish sentiment continues to loom?
The Correlation Between Bitcoin Price, Altcoin Performance
At the time of writing, Bitcoin (BTC) is trading below the $25,000 level, exerting its influence on the broader cryptocurrency market. The price decline of BTC has had a profound impact on altcoins, causing a ripple effect throughout the entire crypto ecosystem.
Source: Coingecko
Altcoins, including Cardano’s ADA, have been significantly affected by Bitcoin’s downturn. ADA, currently priced at $0.259126 at CoinGecko, has experienced a 7.3% slump in the past 24 hours alone, contributing to a substantial seven-day decline of 22%. These figures illustrate the strong correlation between Bitcoin’s price movements and the performance of altcoins.
Bitcoin, being the largest and most established cryptocurrency, often serves as the bellwether for the entire crypto market. When Bitcoin experiences a price drop, it tends to instigate a domino effect, triggering a widespread sell-off across various digital assets.
This correlation stems from the fact that many altcoin traders and investors use Bitcoin as a benchmark or a base currency for trading.
ADA market cap slightly below $9 billion. Chart: TradingView.com
Furthermore, Bitcoin’s price movements often reflect the overall market sentiment and investor confidence in the cryptocurrency industry. When Bitcoin faces significant challenges or negative news, it creates a sense of uncertainty and fear among market participants. As a result, investors may seek to reduce their exposure to riskier assets like altcoins, leading to a decline in their prices.
Waning Interest In Cardano Bullish Rally
According to data provided by Coinalyze on the four-hour timeframe, it has been observed that the Open Interest (OI) for ADA has been decreasing. The diminishing Open Interest suggests that market speculators are displaying a lack of enthusiasm toward a potential bullish rally for ADA.
ADA Open Interest down. Source: Coinalyze
Similarly, the Spot CVD (Cumulative Volume Delta) has been consistently on a downward trend, highlighting the prevailing bearish sentiment in the market. This further emphasizes the dominance of bearish market forces, indicating a negative outlook for ADA.
Featured image from CoinChapter