Discover why Cardano's price is vulnerable to further declines after forming an inverted cup and handle pattern.
Cardano's price rose for two consecutive days, mirroring the performance of most cryptocurrencies. However, it is likely that the cost of the $ADA will wipe out these benefits after an inverted cup and handle, the death cross, and a decline in the number of active users.
Cardano trades at $0.584, with a 24-hour volume of $1.24 billion, according to CoinMarketCap data. Its market capitalization has increased to $20.6 billion.
Cardano's price creates an inverted cup and handle pattern.
The daily time frame shows that Cardano price has pulled back after reaching a peak of $0.863 on May 12.
It formed a death cross pattern on June 4, as the 50-day and 200-day exponential moving averages crossed each other.
The death cross often leads to a more negative side as it indicates that the bears have prevailed.
The $ADA price is also gradually forming an inverted cup and handle pattern, which is a popular continuation sign. T
his pattern consists of a horizontal support, in this case at $0.519. It also has a rounded top, with the upper part at $0.863.
The handle section features pullback or consolidation, which is happening now. This handle section is followed by a bearish breakdown.
In an inverse C&H pattern the profit target is established by first finding the high. In this case, the high is $0.863 and the low is $0.519, giving it a high of $0.344. The breakdown point is the bottom of the cup at $0.519, giving it a target of $0.179 ($0.519 minus $0.344).
A break above the 200-day moving average at $0.703 would invalidate the bearish ADA price forecast.
Cardano's active users are falling.
Third-party data shows that Cardano's network is not doing well, especially for a project valued at more than $20 billion.
Per Artemis, Cardano Chain's daily active users have been on a freefall this year. It had 20,000 users in June, down from last year's high of 54.4k. This has been a drop for several months in a row.
Further data showed that the number of transactions fell to 619k this month, the lowest level in over a year.
In November last year, transactions reached 2.8 million. In contrast, Solana’s transactions in the past 30 days were over 2 billion.
Cardano's on-chain fee has also dropped to just $146,000 in the past 30 days, down from $978,000 in December last year. Solana earned over $26 million in the same period.
Its stablecoin supply has dropped to $31 million, a small amount considering Unichain, which was launched by Uniswap in March, has more than $327 million.
Cardano's price may also crash as futures open interest declines. It has lost over $678 million, down from its year-to-date high of $1.5 billion.
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