Cardano pricehas diverged from its big-cap cryptocurrency peers recently. As I predicted last week, the ADA price has broken-out lower recently and retested the $0.9866 support level. It is now trading at $1.0220, which is 31% below its all-time high of $1.4862.
What happened: Most digital currencies rallied during the weekend as their demand rose after Biden signed the $1.9 trillion stimulus package. Also, data released last week revealed that inflation was not surging as most people were expecting. Bitcoin rose to a record high of $61,000 while Ethereum came short of its all-time high.
ADA has diverged from BTC and ETH
Cardano price, on the other hand, has lagged. It has declined by almost 10% in the past seven days, bringing its total market cap to more than $33 billion. This makes it the 6th largest digital currency in the world.
This performance is partly because of key concerns about the efficacy of the Cardano network. While the network recently went through the Mary update, there are concerns that developers are yet to embrace it. In a note, Nic Carter of Coin Metrics said:
“I am not aware of a single popular application deployed on Cardano, nor have I seen any enthusiasm for the platform among developers. I am truly mystified as to why it is enjoying a resurgence in popularity.”
Why it matters: A lack of adequate demand for Cadano’s network could have an impact on ADA, its native coin. In contrast, ETH and DOT prices have rallied in part because of the strong adoption in the DeFi industry.
Cardano Price Forecast
Last week, I predicted that the Cardano price was setting up a bearish breakout. I pointed to the overall bearish triangle pattern and the head and shoulders pattern that was forming on the four-hour chart.
Turning to the hourly chart, we see that ADA has been pressured significantly lately. It has moved below the 25-period and 15-period exponential moving averages (EMA). The Relative Strength Index (RSI) has also moved to the oversold level. It also appears to be forming an inverted cup and handle pattern.
Therefore, in the near term, the price may continue to decline as bears attempt to retest the important support at $0.9840. If this happens, the price will then consolidate or have a bullish pullback and then resume the downward rally.