The Federal Reserve’s rate cut in 2019 saw Cardano plummet by 57%, showcasing a vulnerability to traditional financial changes. As the market braces for another potential rate cut, the cryptocurrency could face a similar fate.
Today, the public debt has surged to nearly $35 trillion, with interest rates standing at 5.33%, more than double the levels seen in 2019. This heightened economic backdrop sets the stage for a precarious situation for Cardano.
Historically, Cardano has exhibited connections with traditional financial movements, evidenced by the 2019 rate cut fallout. With the Federal Reserve gearing up for another meeting that is expected to result in a rate cut, Cardano could be in for a rough ride.
Despite uncertainties surrounding the direct correlation between rate cuts and crypto declines, Cardano has shown a clear decrease in value during such events. Technical indicators such as the Stochastic RSI, MACD, and Visible Range Volume Profile point towards a bearish sentiment in the market.
While Cardano currently sits within a macro Fibonacci golden pocket zone, doubts linger about the sustainability of this support given its decline below other key Fibonacci retracement levels. A stronger support level lies at $0.2349, but even a drop to this level would signify a 25% decline from the current price, presenting a challenging scenario for investors.
With a potentially volatile market ahead, it may be prudent for traders to adopt a cautious approach. Waiting for Cardano to drop below the $0.2951 golden pocket before considering short positions could offer a more strategic entry point. A dead cat bounce could occur before the upcoming Fed meeting, followed by a projected 2-3 month downtrend once the rate cuts come into effect.
It is important to note that this article does not serve as investment advice and should be viewed strictly for educational purposes. Investors should conduct their own research and consult with financial experts before making any investment decisions based on the information provided above.
