The Cardano (ADA/USD) price has struggled significantly in the past few weeks. It is trading at $2.0910, which is about 32% below its highest level in September. This drop brings its total market capitalization to more than $66 billion, making it the 4th biggest cryptocurrency in the world.
September was a relatively difficult month for Cardano. Its price dropped from an all-time high of $3.0976 to a low of $1.1960.
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There are several reasons why the ADA price dropped in September. First, there was the buy the rumours, sell the news situation that happened during the month. This is a situation where investors buy an asset ahead of a major announcement or event and then exit when the event happens.
In this case, the event was the Alonzo hard fork. In it, Cardano started accepting smart contracts features. With smart contracts, it became possible for developers to build decentralized applications (DAPPs) and decentralized autonomous organizations (DAOs). As such, these applications will then compete with those built-in other chains like Ethereum, Binance, and Avalanche.
Second, Cardano price declined sharply in September because of regulatory concerns. In a statement, the People’s Bank of China (PBOC) announced that cryptocurrencies were illegal in the country. The government also banned foreign companies from offering cryptocurrency services to Chinese citizens.
As a result, many companies like Huobi, OKEx and Binance stopped accepting new Chinese customers. They will then retire the existing ones in a while. In the United States, the Securities and Exchange Commission (SEC) is investigating stablecoins, which are cryptocurrencies tied to fiat currencies.
Third, the ADA price tumbled because of the rising risks in the financial market. These risks included the Evergrande crisis and the possibility of a US government default. Also, major central banks like the Federal Reserve and Bank of England (BOE) started sounding hawkish.
The daily chart shows that the Cardano price has been in a major sell-off in the past few weeks. Along the way, it has managed to move below the key support level at $2.4915, which was the previous all-time high. At the same time, the 25-day and 50-day moving averages have made a bearish crossover pattern. The Relative Strength Index (RSI) has formed a bearish divergence pattern. At the same time, ADA seems to be forming the handle section of the cup and handle pattern. Therefore, the price will likely remain under pressure for a while and then bounce back in October.
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