Cardano (ADA) continues to plunge and approaches the support threshold of 0.40 USD at the time of writing on Friday. Notably, the wave of selling occurred even as the U.S. Federal Reserve (Fed) just announced a decision to loosen monetary policy, amidst the ambiguity regarding the timeline for interest rate cuts in 2026 still looming over the cryptocurrency market.
Although the Fed has reduced the benchmark lending rate by an additional 25 basis points, down to 3.50%–3.75% early Thursday morning, the overall outlook still leans towards a 'hawkish' stance. Chairman Jerome Powell warned that persistent inflationary pressures along with the cooling labor market could lead the Fed to implement fewer rate cuts than previously expected.
In this context, Cardano and the group of risk assets are likely to remain under pressure from bears until the market regains stability and new strong catalysts appear to reverse the trend.
Retail investor interest in Cardano is declining
The Cardano derivatives market has yet to recover from the liquidation shock on 10/10, when nearly 118 million USD in long positions and 22 million USD in short positions were wiped out. In just one day, the cryptocurrency market lost approximately 19 billion USD, leading to a severely weakened investor sentiment.
Cardano liquidation data | Source: CoinGlass
Since that leverage reduction, demand from retail investors for Cardano remains subdued. Open interest (OI) in futures contracts has dropped to an average of 773 million USD on Thursday, down from 847 million USD the previous day. Earlier, OI recorded 1.51 billion USD on 10/10 and peaked at 1.95 billion USD on 14/9.
To improve market sentiment and attract retail capital back, OI needs to recover steadily to create a solid foundation for a bullish trend.
Open interest of Cardano contracts | Source: CoinGlass
Technical outlook: Bears tighten control
Cardano (ADA) is currently trading around 0.41 USD, down more than 15% from the local peak of 0.48 USD. Strong selling pressure has kept this cryptocurrency below important EMA levels including the 50-period EMA (0.434 USD), the 100-period EMA (0.437 USD), and the 200-period EMA (0.47 USD) on the 4-hour chart. Notably, the 50 EMA is crossing below the 100 EMA, further reinforcing the short-term bearish trend.
ADA/USDT 4-hour chart | Source: TradingView
The MACD line has crossed below the signal line and has expanded into negative territory, indicating that bearish momentum is accelerating. Meanwhile, the RSI has retreated to 37, indicating selling pressure is dominant but has not yet entered an oversold state. The inability of this indicator to maintain above neutral continues to put the bulls at a disadvantage. On the price chart, a downtrend line extending from the 0.60 USD area is blocking all recovery efforts, with the 0.47 USD region acting as key resistance.
The bearish trend strength of ADA is at an average level, reflected in the ADX indicator fluctuating around 24 after cooling off from previous highs. If the bulls can push the price back above the 50 EMA and the 100 EMA at the 0.43 USD level, the recovery momentum could extend to the 200 EMA around 0.47 USD. Conversely, continued failure at this resistance area will keep the bearish trend in control, pushing ADA back to test the December low at 0.37 USD.
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