- Cardano price tumbled below $1 on Thursday as traders reacted to the US Fed hinting at fewer rate cuts in 2025
- Large transaction volumes have declined by $13 billion between December 2 and December 18, signaling disinterest among whale investors
- Technical indicators highlight further downside risks ahead for ADA if the $0.9500 support fails
Cardano, a leading cryptocurrency, saw a significant price drop recently, dipping below $1. This shift is largely due to indications of fewer Federal Reserve rate cuts anticipated in 2025, triggering a market-wide sell-off. Additionally, a marked decrease in large transaction volumes suggests a lack of interest from major investors. With a potential risk of further decline if support fails at $0.9500, let’s take a more in-depth look at the factors influencing this shift.
The Impact of the Federal Reserve’s Decision
The U.S. Federal Reserve (Fed) concluded its December FOMC meeting with a 25-basis-point interest rate cut. Despite this decision aligning with analysts’ expectations, the subsequent statement indicating fewer cuts in 2025 sent ripples of concern across the cryptocurrency market. This resulted in a significant drop in Cardano’s price, as reflected in the below $1 value reached last Thursday. The decline has seen Cardano lag behind other Layer-1 coins like ETH, SOL, and AVAX.
The Decline of Whale Demand for Cardano
A noticeable drop in demand from major investors, often referred to as “whales,” can greatly impact a cryptocurrency’s performance. The past two weeks have seen a substantial $13 billion decrease in large transactions for Cardano, suggesting a lack of confidence among its largest stakeholders. This trend could potentially deter smaller retail investors and trigger further sell-offs. Moreover, the reduced activity from whales suggests lower liquidity in the ADA market, increasing the risk of rapid price downswings during a crypto sell-off.
Future Predictions for Cardano’s Price
Taking into account the recent 25% decline, technical indicators paint a somewhat bearish picture for Cardano’s short-term price action and market momentum. The Donchian Channel shows ADA testing its lower boundary at $0.8688, posing potential downside risks. If ADA fails to hold above the $0.8500-$0.8688 range, the next likely support zone lies near $0.8000. Additionally, overwhelming sell-side activity, as highlighted by the $13 billion drop in large transactions, suggests that even a recovery towards the $1.00 psychological level could face strong resistance.
Conclusion
Cardano’s recent price tumble underscores the inherent risks and uncertainties within the realm of cryptocurrencies. Influenced by external factors such as the Federal Reserve’s decisions and internal dynamics like whale investor activity, ADA’s value demonstrates the market’s volatile nature. As we move forward, it will be crucial for investors, both large and small, to stay informed and carefully consider these variables when making their investment decisions.
