Cardano's Meteoric Rise and Subsequent Decline

Over the weekend, Cardano's ADA token experienced an impressive 60% increase, surpassing the $1 threshold on Sunday. This surge was sparked by an announcement from US President Donald Trump regarding a planned digital asset reserve, which notably included ADA among its components.

Yet, this excitement appears to have been fleeting. As of now, ADA has fallen by 20% within a mere 24 hours, dipping back below the critical $1 level.

ADA Sees a 20% Decrease in 24 Hours—Is This the End of the Rally?

The rise of ADA above $1 was closely tied to Trump's proposal of a US strategic cryptocurrency reserve that would include ADA, alongside Bitcoin (BTC), Ethereum (ETH), XRP, and Solana (SOL).

Nonetheless, the speculative fervor surrounding this announcement seems to have diminished, triggering a wave of profit-taking among investors. Currently, ADA stands at $0.82, marking a significant 20% decline over the last day.

Technical indicators point to waning interest in ADA. The Relative Strength Index (RSI) is on a downward trend, indicating a drop in buying activity. At present, this vital momentum tool, which gauges whether an asset is overbought or oversold, is nearing a potential breach of the critical 50 line.

The bearish trend is further reinforced by ADA's current positioning relative to its 20-day exponential moving average (EMA). This EMA reflects the asset's average price over the last 20 trading days, providing additional weight to recent price shifts.

A price drop below this 20-day EMA suggests weakening momentum in the short term. A confirmed breach of this level would indicate a possible reversal toward bearish trends, intensifying selling pressure and raising the risk of further declines.

Will ADA Reach $0.94 with Renewed Buyer Interest?

At the moment, ADA is trading at $0.82, maintaining a support level established at $0.72. If bearish trends continue to mount, this support could be at risk of failing. Such an occurrence could see prices plummet toward the $0.60 mark.

Conversely, if buyer interest revives, this bearish sentiment might be countered. A halt in profit-taking activities and new market entrants could elevate ADA's price up to $0.94.

Pushing past this resistance level could catapult Cardano's value to a three-month high of $1.32.