The article highlights how Cardano experienced a significant drop of 57% when the Federal Reserve implemented a rate cut back in 2019. This event coincided with a downtrend in the cryptocurrency market, which persisted for several months. The upcoming Federal Reserve meeting raises concerns that history may repeat itself, leading to a potential multi-month decline for Cardano.
Comparing the economic conditions of 2019 to present-day, it is evident that the public debt has increased from $22 trillion to nearly $35 trillion. Additionally, interest rates have more than doubled from 2.39% to 5.33%. These factors create a different environment for Cardano, which could face challenges translating into a lowered price point.
Technical Indicators and Market Analysis
Analyzing technical indicators such as the Stochastic RSI, MACD, and Visible Range Volume Profile (VRVP) suggests a bearish outlook for Cardano. The Stochastic RSI shows oversold conditions, while the MACD signals downward pressure and bearish momentum. The VRVP indicates weak support within the current price range, with a significant volume bar at the $0.15 level, suggesting a strong support zone.
While Cardano currently resides within a macro Fibonacci golden pocket between $0.2951 and $0.3204, it has fallen below the 78.6% retracement on multiple Fibonacci retracement points. This raises doubts about the strength of the golden pocket as a support level. A more significant support lies at $0.2349, which was respected during the 2022 bear market. However, a drop to this level would still represent a 25% decline from the current price of $0.315.
The article suggests that there may be a temporary rebound in Cardano’s price before the upcoming Federal Reserve meeting on September 18. However, a 2-3 month downtrend is expected thereafter until the Fed slows its rate cuts. A cautious approach would involve waiting for Cardano to drop below the $0.2951 golden pocket before considering shorting the cryptocurrency. This strategy offers a safer entry point compared to immediate shorting and allows for a more calculated move down to $0.2349 as a potential support level.
The current economic conditions, technical indicators, and market analysis all point towards a potential downtrend for Cardano. While there may be short-term fluctuations, the overall trajectory suggests a bearish outlook. Traders and investors should exercise caution and consider their risk tolerance when navigating the volatile cryptocurrency market.