ADA, the native cryptocurrency of the Cardano blockchain, fell 2.5% during Wednesday’s U.S. market session to trade at $0.66. This selling pressure aligns with the broader market correction, as Bitcoin records an overhead supply at $107,000. However, the ADA price could face accelerated selling pressure amid a decline in open interest and a death crossover of exponential moving averages.
Declining Open Interest Reflects Risk-Off Sentiment
Since mid-May, the Cardano price has experienced a sustained downtrend, declining from $0.86 to $0.66—a 23% decrease. This correction momentum accelerated when Bitcoin reverted immediately from its new high of $112,000, triggering a widespread market downturn.
In addition, ADA Futures Open Interest has plunged from $1 billion to $825 million—a 17.5% decrease— in the last three weeks. This decline typically indicates that traders are closing their positions or avoiding new entries due to market uncertainty and a lack of conviction.
Combined with price correction, the OI data downfall highlights locking in profits or cutting losses, reinforcing the bearish narrative. If the trend continues, the ADA price will see accelerated selling pressure and potential breakdown.
Cardano Head and Shoulder Pattern Hints Major Breakdown
Following a deeper analysis into Cardano’s daily chart, the price action reveals the formation of a head and shoulder pattern. The chart setup is characterized by three peaks, the middle one of which extends longer, and two short shoulders surrounding it.
The H&S pattern is commonly observed at major market tops and reversal sites, renewing the bearish momentum in price. As ADA’s 50-day EMA slope is poised to breach the 200-day EMA line, the sellers could strengthen their grip and push a breakdown below the $0.657 neckline support.
Typically, the post-breakdown fall extends to the same length as the distance between the tip of the head and neckline, measured from the breach point. If it materializes, the Cardano price could plunge 22% to hit multi-month support of $0.51, followed by $0.44.
On the contrary, if buyers push the price above the $0.78 resistance, the bearish thesis will get invalidated.
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