Cardano ADA at Crossroads: 20% Drop or 50% Rally Ahead?

The prevailing bearish sentiment in the broader cryptocurrency market has taken a heavy toll on Cardano’s ADA. Data from CoinGecko shows the asset trading far below its local peak above $1 earlier this year, with prominent analyst Ali Martinez providing a grim short-term outlook. Martinez observed that ADA’s “SuperTrend” indicator has flipped bearish, a technical signal he notes preceded an 80% price collapse the last time it occurred. Based on this and recent performance, he assumes the valuation may continue sliding toward the $0.29 support zone, which would represent a decline of roughly 20% from current levels.

This pessimistic view is echoed by other market participants. X user Node revealed they have “found solace” in shorting ADA to soften the impact of the potential bear market, stating, “Every little bounce we get is an easy short (on basically anything) until conditions change.” This sentiment underscores a tactical approach among some traders who see continued downside pressure as the path of least resistance for ADA in the near term.

Despite the sharp pullback, a vocal cohort of analysts points to technical and on-chain metrics suggesting ADA could be primed for a resurgence. A key technical indicator is the Relative Strength Index (RSI), which for ADA has fallen below 30. In technical analysis, an RSI reading below 30 is considered to signal oversold territory and often precedes a potential trend reversal or rally. The RSI measures the speed and magnitude of recent price changes, and this low reading hints that the selling pressure may be exhausting itself.

Further supporting this view, analyst Marzell pointed to early signs of a rebound, citing bullish RSI and MACD divergence. However, he tempered optimism by noting that ADA’s price remains below the critical 50- and 100-day moving averages (MAs), which act as resistance. For a sustained move toward the $0.50 target, a decisive breakout from the current territory is essential. The conflicting signals—bullish divergence versus key resistance levels—create the central tension in ADA’s price narrative.

Beyond pure price charts, on-chain data provides crucial context for ADA’s potential trajectory. A significant metric highlighted in the analysis is ADA’s exchange netflow. Data from CoinGlass shows that over the past several months, outflows from centralized exchanges have significantly outpaced inflows. This trend indicates that investors are increasingly moving their ADA holdings from trading platforms to self-custody methods, such as personal wallets.

This shift in holder behavior is critically important for supply dynamics. By withdrawing tokens from exchanges, investors reduce the immediately available supply for sale, which in turn can alleviate selling pressure. A sustained trend of exchange outflows can create a more favorable supply-side environment, potentially laying the groundwork for price stability or recovery if demand picks up. This on-chain metric, combined with the oversold RSI, forms the backbone of the bullish argument for Cardano’s native token.