Analysis of Cardano’s Potential Price Drop Amid Federal Reserve Rate Cuts

As seen in the past, Cardano faced a significant 57% drop when the Federal Reserve initiated rate cuts back in 2019. This sudden downturn in the cryptocurrency market was triggered by the cut in interest rates and was further exacerbated by the uncertainties surrounding the link between rate cuts and crypto declines. The correlation between traditional finance and cryptocurrencies, including Cardano, became more evident during this period, hinting at a potential repeat scenario in the current market.

Fast forward to the present, where the Federal Reserve is once again considering cutting rates, and the public debt has increased to nearly $35 trillion. With interest rates now more than double the levels in 2019, the stage is set for Cardano to potentially face a similar setup that could bring about a major downside. The upcoming Federal Reserve meeting is likely to result in a rate cut based on CME data, paving the way for potential multi-month decline in Cardano’s price.

If history repeats itself, Cardano could experience a downtrend that might last until the end of the year, with a possible recovery in early 2025. This downward trend could potentially push Cardano’s price down to around $0.15, which would be a significant drop from its current levels. Furthermore, the month of September has historically been challenging for both stocks and crypto, with September 2020 witnessing a downtrend in Cardano’s price during a halving year. The current 10% drop since the beginning of September, coupled with other factors, could lead Cardano towards a deeper fall in the coming weeks and months.

Taking a deeper dive into the technical indicators, Cardano’s monthly Stochastic RSI and MACD are flashing warning signs that shouldn’t be ignored. Both indicators are painting a bearish picture for ADA, indicating a potentially prolonged downward trajectory in its price. The Visible Range Volume Profile (VRVP) further adds negative pressure to the outlook, highlighting weak support within the current price range. The potential gap in the volume profile below the current price level suggests limited trading activity to slow down a further drop in Cardano’s price.

While there are factors that could prevent Cardano from dropping sharply, such as the macro Fibonacci golden pocket acting as temporary support, doubts arise about the long-term sustainability of this zone. ADA has already fallen below the 78.6% retracement on various Fibonacci levels, indicating a potential weakness in the current golden pocket. A stronger support lies at $0.2349, a level respected during the 2022 bear market, but a drop to that level from the current price represents a 25% decline.

In light of the potential market conditions and upcoming events, it is crucial for traders and investors to assess their risk tolerance and investment strategy. While a dead cat bounce might precede the September 18 Fed meeting, Cardano is likely to face a 2-3 month downtrend afterward. A more cautious approach would involve waiting for ADA to drop below the $0.2951 golden pocket before considering shorting positions. This approach offers a safer entry point compared to immediate shorting, as Cardano could witness a short-term uptrend while holding above the golden pocket.

The analysis of Cardano’s potential price drop amid Federal Reserve rate cuts highlights the importance of monitoring market conditions, technical indicators, and risk management strategies. While historical patterns and correlations can provide insights into potential outcomes, it is essential for investors to conduct their research and analysis before making any investment decisions.