3 reasons why Cardano can sink further despite ADA price bouncing 58%
Cardano (ADA) pared a big portion of the weekly losses incurred during this week's crypto market rout.
ADA's price reached an intraday high of $0.60 on May 13, a day after rebounding from its week-to-date low of $0.38 — a 58% rally.
The huge upside retracement appeared in the wake of similar price action in the crypto market with top cryptos Bitcoin (BTC) and Ether (ETH) rebounding by 23% and 25.75% since yesterday's lows.
But the sharp ADA recovery does not promise an extended upward continuation, at least according to three of these factors discussed below.
First, the price action in the Cardano and similar crypto-assets has been in lockstep with U.S. equities, especially tech stocks.
Notably, the correlation coefficient between ADA and the tech-heavy Nasdaq Composite was 0.93 on May 13, meaning that any major moves in stocks would likely steer Cardano in the same direction.
Moreover, the chances of Nasdaq undergoing a sharp recovery are currently slim, as analysts highlight the overstretched valuations of the Big Tech stocks and their probability of crashing further in a higher interest-rate environment.
"The [ax] is hanging, rather, over high-growth tech companies," opines Richard Waters, the Financial Times' West Coast editor, adding:
Simply put, Cardano's persistent positive correlation with Nasdaq could result in more sharp declines in the ADA market, at least for the time bein.
Secondly, another hint of a potential Cardano price decline comes from a technical structure highlighted by Capo of Crypto, an independent market analyst.
The pseudonymous analyst notes that ADA could fall to the $0.30-$0.35 range next, given its possibility to paint the fifth and final wave of a bearish Elliott Wave setup, as shown in the chart
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