Cardano’s most challenging week since May 2021 finally over: What’s next for ADA altcoin?

Cardano (ADA) is a blockchain platform aiming to provide a secure and scalable infrastructure for decentralised applications. ADA recently experienced a significant decline of nearly 30 percent but has since shown a modest bounce. However, predicting future price movements requires a thorough analysis of charts, indicators, and market trends.

Cardano’s worst week since May 2021 is over — Will ADA price rebound 40%?
Read more: https://t.co/9dJ1m64sG0
Credit: Coin Telegraph #crypto

— Metaverse Media Group (@metamediaworld) June 12, 2023

Why did Cardano go down?

The Securities and Exchange Commission (SEC) alleged that Coinbase was involved in the illegal trading of tokens categorised as securities and not commodities since 2019, it was also said to be involved in the intertwining of exchanges, broker & clearing agencies without SEC registration, resulting in the loss of billions of dollars.

On June 9, U.S.-based investment platform Robinhood, which allows users to trade cryptocurrencies, announced it would delist ADA from its platform. This preceded a 30 percent drop in ADA’s price on the day.

Cardano reaches unprecedented undervaluation since March 2020

Cardano has shown signs of a potential recovery despite recent setbacks. The token's current bounce-back follows a significant drop in its daily relative strength index (RSI), which measures the speed and magnitude of a security's recent price changes to evaluate overhauled or undervalued conditions in the price of that security.

In the past, Cardano experienced a 900 percent price surge within four months after similar oversold readings in March 2020. This was primarily driven by the Federal Reserve's quantitative easing policy, which boosted confidence in riskier markets. However, the current scenario differs as the Fed plans to raise interest rates to combat persistent inflation, potentially draining liquidity from the market.

Moreover, the SEC's regulatory actions have created unfavorable conditions for crypto assets like ADA in the U.S. Considering these factors, any potential rebound from oversold levels might be weaker than the post-March 2020 market recovery.

Analysing the three-day chart, ADA appears to be trading within a range of $0.247–0.382, similar to its price trends in January 2021 and January 2023. A rebound from the $0.247 support level could initiate an uptrend toward $0.382 by October 2023. This resistance level, which is 40 percent higher than the current price, aligns with the 200-3D EMA (the red wave).