Cardano Currently Declining: Is This the Start of a Bearish Rally?

ADA drops 7% in 24 hours, trading at $0.930, with bearish indicators looming.
Onchain metrics show plunging trading volume, active addresses, and total value locked (TVL).
Bear flag pattern suggests ADA could dip further, with $0.72 as the next target.

On January 13, Cardano (ADA) entered its second consecutive day of losses, dropping 7% in the last 24 hours to settle at $0.930. While ADA’s decline stems from its bearish technical setup, it’s also tied to a broader crypto market downturn. The cryptocurrency market has been in a risk-off mode, driven by hawkish expectations from the US Federal Reserve.

Bitcoin (BTC) and Ethereum (ETH) have similarly declined, down 0.8% and 2%, respectively. Other major cryptocurrencies like BNB, XRP, and DOGE also posted losses, with the overall crypto market cap dipping 1.73% to $3.25 trillion.

Stronger-than-expected US macroeconomic data has fueled fears that the Fed might delay or reduce the number of rate cuts in 2025, putting further pressure on the market. According to the CME Group’s FedWatch Tool, the odds of even a small 0.25% rate cut at the Fed’s January meeting are just 2.7%.

Onchain Metrics Highlight Waning Interest in Cardano

Beyond macroeconomic factors, weak onchain metrics are also driving ADA’s decline. Data from Artemis reveals that Cardano’s daily DEX trading volume plummeted from $31.3 million on December 12, 2024, to just $4.9 million on January 12. That’s a sharp drop to levels not seen since early November.

Similarly, daily active addresses on the Cardano network fell by 70%, dropping from around 96,700 to 29,500 during the same period. Meanwhile, the network’s total value locked (TVL), according to DefiLlama, has tumbled from $701.4 million in early December to $492.7 million as of January 13.

These declines in activity coincide with ADA’s 30% price drop, reflecting decreased investor interest and liquidity on the network.

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Bear Flag Pattern Signals Possible Drop to $0.72

From a technical standpoint, ADA’s four-hour chart shows a bear flag pattern—a bearish continuation signal. On January 13, the price broke below the flag’s lower trendline at $0.945, signaling potential further downside.

The height of the previous downtrend suggests that ADA could drop to $0.72, a level last seen in mid-November 2024. With multiple bearish indicators in play, ADA may face more challenges in the near term.

Final Thoughts

Cardano’s recent price action highlights a mix of macroeconomic and network-specific pressures. While long-term holders might see this as an opportunity, the short-term outlook remains uncertain, with $0.72 as the next critical support level. For now, cautious trading is key.