A widely followed crypto strategist believes Cardano (ADA) is close to making a steep move to the downside.
Analyst Benjamin Cowen warns his 787,000 YouTube subscribers that Cardano appears to be on the verge of breaking below a key support level on the weekly chart after retesting it several times since December 2022.
In technical analysis, a support level tends to become weaker when an asset revisits it again and again as buyers get exhausted.
Says Cowen,
“It’s hard to imagine that it [Cardano] will just stay here [above the $0.240 support level] for the rest of the year and not make a decisive move. I think there will be a decisive move before the end of the year. I think it’s going to be down.”
According to the widely followed crypto analyst, Cardano is likely to plummet due to a fall in net liquidity. Cowen shares a chart showing how ADA is basically following the ebb and flow of global net liquidity.
“ADA, it’s just basically tracking net liquidity here…
So to me, it should not really be that surprising that altcoins are performing in this way because net liquidity is going down.
Now, net liquidity here is being defined as the balance sheet central banks of various central banks including from the United States, Canada, the European Central Bank, the UK, China, Japan, Australia, New Zealand and we’re subtracting out the TGA (Treasury General Account) and the reverse repo.”
On when Cardano and other altcoins are likely to turn bullish, Cowen says,
“Eventually, when liquidity comes back, you might expect altcoins to sort of mean revert back up higher. And that’s where those oversized gains that a lot of people are looking for come from. Unfortunately, they do not come oftentimes in the pre-halving year. The altcoin market just simply gets wrecked.
So when you go look at ADA/USD, we have to be just reminded of the fact that it really is a function of excess liquidity.”
ADA is worth $0.246 at time of writing.
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