Cardano has experienced a 13% decrease in its price since the approval of Ethereum ETFs by the US Securities and Exchange Commission (SEC) on May 23. This decline, which saw Cardano’s price drop as low as $0.46, can be attributed to investors redirecting their capital towards Ethereum (ETH) and other altcoins on the smart contract network.
The approval of Ethereum ETFs has led to a surge in funds flowing into ETH and other assets hosted on the platform. As a result, rival Proof-of-Stake (PoS) networks like Cardano (ADA) and Solana (SOL) have been negatively affected by the market shuffle. The influx of funds into Ethereum ETFs poses a bearish threat to ADA’s price action.
Examining the chart above, it is evident that ADA’s price has declined by 13.64% from its weekly peak of $0.51 on May 21. In contrast, Ethereum’s price has continued to rise, experiencing a 25% weekly gain and maintaining support above $3,700.
A similar trend of negative divergence between ADA and ETH price action can be observed in Solana markets, another PoS network. Solana has struggled to gain traction as investors focus on Ethereum, indicating a preference for ETH and other Ethereum-hosted assets like PEPE, which has achieved two new all-time highs in consecutive weeks and entered the top 20 ranked crypto assets by market capitalization.
Within just five months of its launch, Bitcoin ETFs have attracted over $58 billion in BTC holdings. As investors prepare for billions of dollars to flow into Ethereum ETFs in the coming weeks, ADA’s price and other rival PoS networks may struggle to break out of the current downtrend.
Despite the recent drop-off in ADA’s price, on-chain data trends suggest that Cardano bulls have stepped in to defend the $0.45 support level. The Order Books chart by IntoTheBlock reveals that there are currently more active buy orders for ADA than sell orders on major exchanges like Binance and Coinbase. Bulls have placed orders to purchase 225 million ADA at an average price of $0.46, while bears have only listed 207 million ADA for sale at the current prices. This indicates that after a period of selling, ADA bears may be losing momentum. With bulls now dominating the market with a stronger buy-wall, ADA’s price is likely to hold above the $0.45 support level in the near future.
If the support level does break, ADA’s price could potentially drop to the next psychological support cluster at $0.40. However, given the overall bullish sentiment in the crypto markets and the increasing number of buy orders, it is expected that Cardano’s price will avoid another significant decline. Instead, it is likely to consolidate within the $0.45 to $0.48 range in the coming days.
It is important to note that this content is for informational purposes only and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions, and The Crypto Basic is not responsible for any financial losses incurred.