Cardano (ADA) Headed Lower – Flash Crash Hurts Investor Sentiment

Cardano (ADA) extends the bearish mood from the previous session into early trading on Wednesday, being weighed down after the cryptocurrency market experienced a flash crash as leader Bitcoin fell under the key $50,000 level. At the time of writing, ADA/USD is trading around $2.42.

The crash in the market scared investors away from almost all cryptocurrencies across the board, causing a sharp sell-off in Cardano as well, driving its price lower. Despite encouraging fundamental developments, the bearish market sentiment reversed the mood towards ADA and sent it weaker.

However, the world’s third largest cryptocurrency by market cap was already facing some downward pressure before the flash crash, as critics voiced their concerns about the slow pace of processing transactions on smart contracts after the Alonzo upgrade. This resulted in Cardano’s co-founder Charles Hoskinson issuing a warning on Twitter about a ‘massive FUD storm’ underway ahead of the upcoming major upgrade, just like the blockchain has experienced in the past as well.

Room For Upside as Sentiment Improves?

Meanwhile, analysts maintain a bullish outlook for Cardano in the coming sessions once the mood in the overall market improves. According to popular crypto analyst Jason Pizzino, ADA could surge as high as $11 soon after the Alonzo upgrade. A similar optimistic forecast has been shared by another leading crypto strategist, Michaël van de Poppe, who expects the uptrend to continue as long as Cardano’s price holds above the $2.45 mark.

Meanwhile, the potential Ethereum killer could find some support from the announcement of PlutuSwap – an extended AMM protocol built on the Cardano blockchain, that will offer a seamless experience for traders and liquidity providers. In addition to attracting more users to the blockchain, PlutuSwap will also support cross-chain trading which will make it more attractive for users of other blockchains to switch to Cardano’s ecosystem going forward.

Key Levels to Watch

Taking a look at the H4 price chart of ADA/USD, almost all the movinng averages and the MACD are suggesting a bearish bias at the moment. However, the momentum indicator suggests some buying interest, possibly investors looking to get in on the crypto when the price is low.

The pivot point at $2.90 has broken down as have two support levels at $2.73 and $2.51 respectively. In case of further bearish pressure, Cardano’s price could be headed towards the next support level at $2.11, so keen an eye on this level.