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Cardano (ADA) Reaches First Major Support Level: Here's Why This Is Pivotal

Fri, 02/10/2023 - 17:00
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Arman Shirinyan
Crypto Market Review: The market shows that now is time for correction, and not every asset will go through it
Cardano (ADA) Reaches First Major Support Level: Here's Why This Is Pivotal
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Digital assets on the cryptocurrency market are entering a new stage after the recovery that began in January, which is the consolidation that the market desperately needed. Unfortunately, some assets are taking big hits during transitions, while others are successfully hanging there.

Cardano's bounce potential

One of the most prominent digital assets on the market, Cardano (ADA), has recently reached a major support level that could potentially be a reversal point for the asset. Cardano has been steadily rising since the beginning of the year, but it recently broke down and dropped below its trendline, which might be the beginning of a downward reversal.

ADA Chart

One of the most important indicators on the cryptocurrency market is the 50-day moving average (50-day EMA). The 50-day EMA is a trendline that is used to determine whether an asset is in an uptrend or a downtrend. If an asset is moving above its 50-day EMA, it is considered in an uptrend, while if it is moving below its 50-day EMA, it is considered to be in a downtrend. In the case of Cardano, the asset has recently reached its 50-day EMA, which could be a major support level for the asset.

SHIB in freefall

The 50-day EMA is considered a crucial level for assets that are in an uptrend, as it often acts as a guideline for the asset. If an asset falls below its 50-day EMA, it is a bearish signal that could indicate a potential downward reversal. If an asset is able to bounce back above its 50-day EMA, it could indicate a potential upward reversal.

The cryptocurrency market has been quite volatile recently, with many assets experiencing significant price swings. One of the most affected digital currencies is meme token Shiba Inu (SHIB), which has fallen off a cliff after losing more than 11% of its value. This sudden decline comes after the token had gained a significant amount of value since the beginning of the market rally in January.

Shiba Inu (SHIB) Added to Verifiable Assets on Binance: Details

The on-chain data suggests that the main reason for the fall was increased selling activity among SHIB whales. These whales have been actively taking profits at the rally's local high, which has caused a significant amount of selling pressure on the market.

Some investors are concerned that this could be the start of a major sell-off, while others are optimistic that the token will recover from this setback. However, it is important to remember that cryptocurrency markets are highly unpredictable and that anything can happen in the short term.

Solana's tough future

The cryptocurrency market is full of surprises and can often be unpredictable, but one thing remains certain - high liquidation volume can trigger price drops. This was the case for Solana (SOL), which faced an enormous $250 million liquidation volume that fueled a 12% price drop, sending the asset directly to its 50-day moving average.

The bearish RSI divergence, descending volume at around the top and the volatile price drop all suggest that Solana is facing tough times ahead. The 50-day moving average is usually seen as a key support level, and if it cannot hold, Solana may experience a further price decline. The next support level for Solana is around the $14 mark, which could be the next likely stopping point for the asset.

The massive liquidation volume, combined with the bearish technical indicators, suggests that market sentiment toward Solana is becoming increasingly negative. This may be due to a shift in the overall market sentiment or a change in the perception of Solana as an investment.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.