Despite a brief two-day price rally, Cardano (ADA) is under strong pressure that could lead to a sharp correction. Technical analysis reveals a dangerous bearish pattern – the inverted cup and handle – along with a death cross formation and plummeting on-chain activity.
📉 Chart Patterns Indicate Trouble Ahead
ADA is currently trading at $0.584, with a market cap of $20.6 billion and daily trading volume over $1.2 billion. On the daily chart, a bearish pattern is forming – the inverted cup and handle, often a precursor to steep declines. The pattern’s peak stands at $0.863, with critical horizontal support at $0.519.
Calculating the pattern’s height ($0.344) and subtracting it from the breakdown point ($0.519) gives a bearish price target of $0.179 – a potential 46% drop.
Adding to the bearish sentiment, a death cross formed on June 4, when the 50-day EMA crossed below the 200-day EMA. This is traditionally seen as a signal of prolonged downward momentum. The bearish outlook may be invalidated only if ADA climbs back above $0.703.
📉 Cardano's Fundamentals Are Weakening
The technical concerns are compounded by weak on-chain metrics. According to Artemis, the number of active users on the Cardano blockchain has dropped sharply from over 54,400 to just 20,000 – a more than 60% decrease.
Similarly, monthly transaction volume has plummeted to 619,000 – the lowest in over a year. For comparison, Solana processed more than 2 billion transactions over the same period.
Fee revenue has also collapsed: Cardano brought in just $146,000 over the last 30 days, whereas Solana earned over $26 million. Additionally, stablecoin supply on Cardano is down to $31 million – a small figure compared to Uniswap's Unichain, which holds $327 million.
📉 Investor Confidence Is Fading
Investor sentiment is waning, as reflected by a sharp drop in open interest in Cardano futures. Open interest has declined from $1.5 billion to just $822 million, indicating lower speculative appetite and weaker confidence in ADA's price trajectory.
🔍 Conclusion: Time for Caution?
Cardano is currently facing a perfect storm of bearish technical indicators, falling network activity, and weakening investor interest. Unless ADA recovers key levels soon, it could fall as low as $0.179. For investors, the coming days may prove highly volatile — and worth watching closely.
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