* Cardano (ADA) has recorded a 10% decline in the past 24 hours and is currently trading at $0.415.
* The currency holds the support level of $0.40 and may bounce back towards the $0.50 area.
* Despite the bearish performance that comes amid declining interest in the derivatives market and the federal interest rate decision, on-chain data suggests that Cardano might recover soon.
ADA's performance and challenges in the derivatives market
ADA is the worst performer among the top 10 cryptocurrencies by market capitalization, having lost 10% of its value in the last day. This bearish performance comes amid a 'risk-averse' atmosphere in the market, especially following news of the federal interest rate and a decline in open interest.
Data extracted from CoinGlass indicates a 13% decline in open interest for Cardano futures contracts over the past 24 hours, reaching $725.61 million. This decline indicates a significant reduction in active positions (both long and short), reflecting a lack of interest from traders in the currency at this time.
The funding rate for ADA has also fallen to 0.0019%, down from 0.0047% recorded on Wednesday, confirming a decline in bullish sentiment. Moreover, short positions account for 54.62% of the total active positions, indicating that traders are more inclined towards a bearish trend in ADA's price movements.
The activity on the chain brings hope for recovery
Despite the decline in derivatives data, on-chain data derived from Santiment indicates potential bullish signals. Transactions on the Cardano network reached their highest level in nine months, recording 4.11 billion ADA on Tuesday. This increase in chain activity could boost ADA's price in the near to medium term.
Additionally, the number of daily active addresses reached its highest level in four months, recording 34,229 addresses, indicating renewed interest in the Cardano network.
Technical Analysis: Potential breakout above $0.50
The ADA/USD chart on a 4-hour timeframe shows that it is 'bullish and effective', forming an MSU (Market Shift) structure on this timeframe. Although technical indicators still tend to be bearish, they may turn bullish soon as long as ADA holds above the support level of $0.40.
* Relative Strength Index (RSI): Stands at 36, indicating that ADA is still within the bearish zone.
* Moving Average Convergence Divergence (MACD) Indicator: The indicator lines are in the positive zone, indicating a growing bullish bias.
Price Forecast:
* Bullish scenario (rebound): If the trend reverses, ADA could head towards the resistance level of $0.50 in the coming hours or days. A breakthrough of this level could push Cardano's price to $0.6069, the level recorded on November 11.
* Bearish scenario (failure to reverse): A failure to reverse the trend could lead ADA to retest its lowest level recorded on December 1 at $0.3707.
In short, Cardano (ADA) price stands at a critical pivot point, where bearish sentiment in the derivatives market clashes with the noticeable increase in user activity on the chain, considering the importance of holding the critical support level at $0.40.
