- Investors are likely to lower their stake in ADA this summer.
- ADA holders need to practice caution as monetary policy in the US may tighten further.
- ADA’s price could drop 70% in the coming weeks if bears get their way.
Investors are likely to reshuffle their portfolios this summer as Cardano’s (ADA’s) underperformance could cut holiday funding for it short in the coming months. This comes after investors have poured more money into ADA than they have gotten in return over the past few months. As a result, investors may look to lower their stake in ADA, if not sell their ADA off.
ADA’s less than adequate performance over the last few months has set it up for a tiered drop to the downside towards $0.424, which will print a new low for June. After that, the price of ADA could target the next support level at $0.372, which could spell danger as it is the latest line of defense for ADA’s price before bears gain the upper hand and pull ADA’s price down 70%.
Investors can expect this scenario to play out if there is further and quicker monetary tightening from the Fed.
Daily chart for ADA/USD (Source: TradingView)
Possible events that could prevent Cardano’s price from a further downturn could either be the US finally hitting a recession, or cryptos starting to break their link to the traditional market. However, the latter will only come about if independent traders absorb the weight of institutional and hedge fund positioning.
If traders do absorb this weight, then ADA’s price may begin to climb while traditional global markets tank and could hit $0.55 to try to break the chains of the death cross on the daily chart. For this to happen, ADA’s price needs to trade above the 555-day Simple Moving Average (SMA).
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.