Chart of the week: Last Fed rate cut sent Cardano crashing 57% – what about now?

Cardano
dropped
57%
when
the
Federal
Reserve
cut
rates
back
in
2019.
With
another
rate
cut
on
the
horizon,
the
cryptocurrency
faces
a
similar
setup
that
could
bring
major
downside.

Cardano
prepares
for
September
decline

In
May
2019,
the

Federal
Reserve
initiated
its
first
rate
cut,
lowering
rates
from
2.42%
to
2.39%.
Rates
at
that
time
were
much
lower
than
today,
and
the
public
debt
stood
at
$22
trillion.
Today,
debt
has
increased
to
nearly
$35
trillion,
and
interest
rates
now
stand
at
5.33%,
more
than
double
the
2019
levels.

When
the
rates
started
to
fall
in
2019,
Cardano
experienced
a
sudden
drop.
After
a
brief
period
of
recovery,
the
downtrend
continued
for
months
until
early
2020.
An
uptrend
emerged
later,
but
the
market
downturn
during
the

COVID-19
pandemic
coincided
with
further
rate
cuts.
Despite
uncertainties
around
the
exact
link
between
rate
cuts
and
crypto
declines,
Cardano
and
the
broader
market
saw
a
clear
decrease
in
value.

A
similar
scenario
could
unfold
today.
Crypto
has
shown
correlations
with
traditional
finance
in
the
past,
including
during
the
2019
rate
cut.
The
Federal
Reserve’s
upcoming
meeting
is
likely
to
result
in
a
rate
cut
based
on

CME
data.
If
the
market
follows
the
2019
pattern,
Cardano
could
face
a
multi-month
decline,
which
could
last
until
the
end
of
the
year,
before
recovering
in
early
2025.
A
repeat
of
the
previous
trend
could
push
Cardano’s
price
down
to
around
$0.15.

Additionally,
September
has
often
proven
to
be
a
tough
month
for
both
stocks
and
crypto.
In
September
2020,
during
a
halving
year,
Cardano
also
faced
a
downtrend.
Coupled
with
the
current
10%
drop
since
the
start
of
this
month,
these
factors
could
drive
Cardano
toward
a
deeper
fall
in
the
weeks
and
months
ahead
below
its
2022
support
line
at
$0.2349.

Cardano’s
bearish
momentum
grows
with
SRSI,
MACD,
and
VRVP

Many
traders
focus
on
short-term
movements,
but
stepping
back
for
a
longer-term
view
can
give
a
better
sense
of
the
bigger
picture.
Cardano’s
monthly
Stochastic
RSI
(SRSI)
and
MACD
are
flashing
warning
signs
that
shouldn’t
be
ignored,
and
both
are
painting
a
rough
picture
for
ADA.

The
SRSI
tracks
momentum
by
looking
at
an
asset’s
price
range
over
time.
The
scale
goes
from
0
to
100,
with
anything
below
20
showing
oversold
conditions.
Since
March
2024,
the
SRSI
has
been
sliding,
and
it’s
now
closing
in
on
that
oversold
region.

The
MACD,
meanwhile,
is
showing
similar
bearish
vibes.
On
the
monthly
chart,
the
MACD
line
has
already
crossed
below
the
signal
line,
which
is
a
sign
of
downward
pressure.
The
histogram,
which
shows
the
gap
between
the
two
lines,
is
about
to
flip
red,
also
pointing
to
a
growing
bearish
momentum.

Alongside
the
bearish
signals
from
the
Stochastic
RSI
and
MACD,
the
Visible
Range
Volume
Profile
(VRVP)
adds
even
more
negative
pressure
to
the
outlook.
The
VRVP
shows
where
most
trading
volumes
occurred
at
various
price
levels.
In
Cardano’s
case,
the
volume
bars
within
the
current
price
range
are
quite
thin,
which
indicates
weak
support.
The
biggest
volume
bar
begins
at
the
$0.15
level,
suggesting
a
strong
support
zone
there.
Below
the
current
price,
there’s
a
gap
in
the
volume
profile,
which
means
if
Cardano
continues
to
fall,
there’s
little
trading
activity
to
slow
down
the
drop
until
it
reaches
that
$0.15
zone.

Is
Cardano’s
2022
support
line
strong
enough
to
hold?

Despite
the
bearish
indicators,
a
couple
of
factors
could
prevent
Cardano
from
dropping
sharply.
At
the
moment,
the
price
sits
within
a
macro
Fibonacci
golden
pocket,
drawn
from
the
all-time
low
to
the
recent
high
in
March
2024.
This
zone,
between
$0.2951
and
$0.3204,
has
acted
as
support
for
now.
However,
when
looking
at
other
Fibonacci
retracements
from
different
points,
ADA
has
already
fallen
below
the
78.6%
retracement
on
every
one
of
them.
This
could
raise
doubts
about
the
strength
of
the
current
golden
pocket,
as
there’s
a
possibility
it
may
not
hold
up
in
the
long
term.

A
stronger
support
level,
however,
lies
at
$0.2349,
a
line
that
was
respected
during
the
2022
bear
market.
But,
with
ADA
currently
around
$0.315,
a
drop
to
that
support
would
still
represent
a
25%
decline,
which
would
be
far
from
ideal. 

Strategic
considerations

In
our
view,
there
could
be
a
dead
cat
bounce
before
the
September
18
Fed
meeting.
However,
after
that,
ADA
is
likely
to
face
a
2-3
month
downtrend
until
the
Fed
slows
the
pace
of
its
rate
cuts.
A
more
cautious
strategy
would
be
to
wait
for
ADA
to
drop
below
the
$0.2951
golden
pocket
before
shorting.
This
offers
a
safer
entry
point
compared
to
shorting
immediately
right
now,
as
Cardano
could
see
a
short-term
uptrend
while
holding
above
the
golden
pocket.
If
the
price
falls
below
this
level,
shorting
down
to
$0.2349
becomes
a
more
calculated
move.