ADA’s ‘Death Cross’ amid regulatory uncertainty.
Cardano’s ADA token, which competes with Ethereum, has shown an alarming technical analysis pattern known as a “death cross” on its daily price chart.
A death cross occurs when the 50-day simple moving average (SMA) falls below the 200-day SMA. Technical analysis followers view the death cross as a warning sign that the market is about to enter a downward spiral.
According to charting platform TradingView, ADA’s 50- and 200-day SMAs crossed bearishly over the weekend, confirming the first death cross since December 2021.
However, moving average crossovers are backward-looking and are considered unreliable as standalone indicators. Nevertheless, the latest death cross is consistent with the negative regulatory outlook for ADA and other altcoins.
Earlier this month, the US Securities and Exchange Commission (SEC) classified several tokens, including ADA, as securities in its lawsuit against Binance, catching crypto traders off guard. IOG, the company behind Cardano’s development, promptly denied the SEC’s claim. Despite this, ADA has seen a 30% drop in its market value this month, the largest monthly decline since March 2022. This sell-off is likely due to concerns that being classified as a security will subject ADA to more regulatory scrutiny.
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Crypto asset management firm Blofin’s CEO, Matt Hu, said in a report published over the weekend that “if the SEC ultimately prevails (which may take several years or even a decade), altcoin issuers and liquidity providers will face unprecedented difficulties.” Hu added that the regulatory risk is “mainly concentrated on altcoin investors, which has a limited impact on holders who only hold BTC and ETH.”
At the time of writing, ADA was trading at $0.26, according to blockchain data. Cardano released Node version 8.1.1 on the blockchain’s mainnet early on Tuesday, aimed at improving network processes by reducing time periods or epoch transitions on the blockchain.
Edited by Parikshit Mishra.