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Crypto analyst and strategist Benjamin Cowen, closely followed by investors, has warned that Cardano’s ADA, which is highly popular among investors, is on the verge of making a sharp downward move. The analyst expects the turbulent period in altcoins, similar to ADA, to continue for a while longer.
The Bells Toll for Cardano’s ADA
Crypto analyst Benjamin Cowen has warned that Cardano’s ADA appears to be on the verge of dropping below a significant support level on the weekly chart after testing it several times since December 2022. In technical analysis, a support level tends to weaken as an asset repeatedly visits it when buyers are exhausted, and in such cases, the support is expected to be broken. The analyst made the following note in his warning for ADA:
It is difficult to imagine that Cardano will stay above the support level of $0.240 for the rest of the year and not make a decisive move. I believe there will be a decisive move before the end of the year. I think this move will be downward.
Decrease in ADA’s Liquidity
According to the analyst, ADA’s price is also looking downward due to a decrease in net liquidity. Cowen shared a chart showing how ADA essentially follows the fluctuations in global net liquidity and said the following:
ADA’s price essentially follows net liquidity. So, it should not be so surprising that altcoins perform this way because net liquidity is decreasing.
The net liquidity here is calculated by subtracting the balance sheets of various central banks including the US, Canada, Europe, UK, China, Japan, Australia, New Zealand, and the Treasury General Account (TGA) and reverse repo.
Cowen also commented on when ADA and other altcoins may start to rise, saying, “Eventually, when liquidity starts to increase, altcoins can be expected to rise again. This is where many people find the big gains they are looking for. Unfortunately, these gains often do not come in the year before Bitcoin‘s block reward halving. The altcoin market is currently, in simple terms, in ruins. When you look at ADA/USD, you can see that this is a result of an extreme liquidity decrease.”
