Early on Monday, Cardano (ADA) is on a sharp downslide, losing more than 7% of its value over the past 24 hours and working its way down towards testing the key $2 mark, possibly on account of a downbeat mood in the crypto market. At the time of writing, ADA/USD is trading at around $2.17.

Market Sentiment Weighs on Cardano Investors

One of the biggest drivers behind the bearish moves in the world’s third largest cryptocurrency is the downtrend in market leader Bitcoin. After trading around the $50,000 mark a few sessions back, BTC’s price has broken down under the $47,000 level and is currently trading around $45,000. As the largest crypto by market cap, moves in Bitcoin have a strong impact on the overall market sentiment, and in this case, are causing ADA to weaken.

As we mentioned, sentiment is a major driver that dictates moves in the wider crypto sector, especially as several official authorities worldwide are extremely wary about digital assets. Recent comments from ECB President Christine Lagarde on cryptocurrencies could also be a key factor causing the price of Bitcoin and Cardano to slide lower. Lagarde called them highly speculative, insisting that cryptos should not be considered as currencies. She also went on to term the suspicious and criticized them for their high energy consumption, turning the mood among crypto investors sour.

Can Fundamentals Offer Support?

Meanwhile, on the fundamentals front, Cardano could find some support after Co-founder Charles Hoskinson announced a new venture called ‘Hydra’ that the firm is currently working on, shortly after rolling out the Alonzo upgrade. Hydra is a level-2 upgrade to the blockchain which will bring about higher efficiency in off-chain transaction processing capabilities while using the main chain as a secure settlement layer. This will mean higher throughput, lower latency, minimal transaction processing costs and storage requirements for the network, offering higher levels of scalability and versatility for dApp developers.

In addition, the ADA token could also enjoy some support from the recent announcement of Cardence – a decentralized launchpad soon coming to the Cardano network. Cardence currently runs on the Binance Smart Chain but is expanding to offer operations on other leading blockchains, with an aim to become the world’s first decentralized launchpad, simplifying the process of launching a pre-sale for promising dApps.

Key Levels to Watch

On the 4-hour price chart of ADA/USD, moving averages and the MACD signal a strong bearish bias among investors at the moment. However, the Stochastic and RSI along with the momentum indicator point to some buying interest as well.

Cardano’s price remains well below the pivot point but is managing to hold just above the immediate support at $2.16. Keep an eye on this level as further bearish pressure can see this level break down in which case the second support at $2.04 is all that prevents a breakdown below $2.