In May 2019, the Federal Reserve made the decision to cut rates, triggering a 57% drop in Cardano’s price. The rates at that time were significantly lower than what they are today, and the national debt was also lower compared to the current level of nearly $35 trillion. The interest rates have now more than doubled since 2019, standing at 5.33%. The correlation between rate cuts and the performance of Cardano was evident during the 2019 rate cut, which resulted in a downward trend for the cryptocurrency. The upcoming meeting of the Federal Reserve is likely to lead to another rate cut, potentially setting the stage for a similar decline in Cardano’s price.
Potential Future Scenarios for Cardano
If history repeats itself, Cardano could be in for a multi-month decline following the Federal Reserve’s rate cut. This downward trend might last until the end of the year, with a possibility of recovery in early 2025. The price of Cardano could potentially drop to around $0.15, based on past patterns. Additionally, September has historically been a challenging month for both stocks and cryptocurrencies, further adding to the potential downward pressure on Cardano. The current 10% drop in the price of Cardano since the beginning of September, coupled with other factors, could lead to a deeper fall in the weeks and months ahead.
When analyzing the technical indicators for Cardano, warning signs are present. The monthly Stochastic RSI and MACD are both painting a bearish picture for ADA. The Stochastic RSI has been sliding since March 2024, approaching oversold conditions. The MACD line has crossed below the signal line on the monthly chart, indicating downward pressure. The Visible Range Volume Profile (VRVP) further supports the bearish outlook for Cardano, showing weak support within the current price range.
While the current price of Cardano is within a macro Fibonacci golden pocket, providing some support, the cryptocurrency has already fallen below the 78.6% retracement on various Fibonacci levels. This raises concerns about the sustainability of the current support level. A stronger support level lies at $0.2349, which was respected during the 2022 bear market. However, a drop to that level from the current price of $0.315 would still represent a 25% decline, highlighting the potential challenges ahead for Cardano.
Future Outlook and Recommendations
Based on the analysis of historical trends and technical indicators, Cardano is likely to face a 2-3 month downtrend following the upcoming Federal Reserve meeting. A cautious strategy would be to wait for Cardano to drop below the $0.2951 golden pocket before considering shorting the cryptocurrency. This approach offers a safer entry point compared to shorting immediately, as Cardano could experience a short-term uptrend while holding above the golden pocket. However, if the price falls below this level, shorting down to $0.2349 becomes a more calculated move. It is important to note that this article does not provide investment advice and is for educational purposes only.