A widely followed crypto strategist believes that Cardano (ADA) is about to make a steep downward move.
Analyst Benjamin Cowen warns its 787,000 YouTube subscribers, Cardano appears to be on the verge of falling below a key support level on the weekly chart, having retested this several times since December 2022.
In technical analysis, a support level tends to get weaker as an asset returns to it again and again as buyers become exhausted.
Says Cowen,
“That’s hard to imagine [Cardano] will just stay here [above the $0.240 support level] for the rest of the year and not take any decisive step. I think a decisive step will be taken before the end of the year. I think it will go down.”
According to the widely followed crypto analyst, Cardano is likely to plummet due to a drop in net liquidity. Cowen shares a chart showing how ADA actually tracks the ebb and flow of global net liquidity.
“ADA, it’s really just tracking net liquidity here…
So to me it shouldn’t be too surprising that altcoins perform this way as net liquidity falls.
Now net liquidity is defined here as the balance sheet of the central banks of several central banks, including those of the United States, Canada, the European Central Bank, the United Kingdom, China, Japan, Australia and New Zealand, and we draw there the TGA from now on. (Treasury General Account) and the reverse repo.”
When Cardano and other altcoins are likely to turn bullish, Cowen says:
“Ultimately, when liquidity returns, you could expect altcoins to emerges to a kind of average returns to higher. aAnd that’s where those outsized profits that many people are looking for come from. Unfortunately, they are not common in thehalve year. TThe altcoin market is simply being destroyed.
So when you start looking at ADA/USD, we need to be reminded that it is really a function of excess liquidity.”
ADA is worth $0.246 at the time of writing.
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Generated image: Midjourney