Cardano (ADA) Price Drops 7% Amidst Bearish Double Top Formation

Executive Summary

Cardano (ADA) has registered a notable 7.01% price decline within a 24-hour period, concurrently forming a bearish Double Top pattern on its price chart. This technical formation, observed by market analyst WaveRiders2, indicates a potential reversal from an uptrend or a continuation of a downtrend, signaling a prevailing bearish sentiment for the digital asset.

The Event in Detail

The Cardano (ADA) token has recently confirmed a bearish Double Top pattern, a key technical indicator often preceding further price depreciation. Analyst WaveRiders2 highlighted that the peaks of this pattern formed in the $0.9300-$0.9600 region. Specifically, the first top was recorded at $0.9546 on September 13, followed by a second top at $0.9358 on September 18. The subsequent break below the neckline at approximately $0.8500 on September 22 confirmed the bearish setup, suggesting increased downside momentum. This breakdown also marked the end of ADA's short-term uptrend, which had seen it trading within a rising channel since mid-June, consistently forming higher highs and higher lows. The projected downside target following this breakdown points toward $0.7682, aligning with a significant support zone.

Market Implications

The bearish technical structure has coincided with broader market weakness, as the overall cryptocurrency market experienced a significant decline. Cardano's 24-hour price drop exceeded 7%, with reports indicating an overall market loss of approximately $103.37 billion in the last 24 hours. This environment has seen Bitcoin dominance climb to 61.29%, diverting capital away from altcoins like ADA. The Altcoin Season Index concurrently dropped from 43 to 36 overnight, further underscoring a shift in investor preference towards Bitcoin and away from speculative altcoin investments.

Adding to the bearish sentiment, the U.S. Securities and Exchange Commission (SEC) abruptly paused Bitwise's multi-asset ETF, which included a 4.97% allocation to ADA. Although a relatively small allocation, this regulatory action has reignited concerns about the regulatory outlook for altcoins, creating a chilling effect on market sentiment toward altcoin-focused investment products.

On-chain data for Cardano reflects declining network activity. Daily active users (DAU) have dropped to 39.6K from earlier highs exceeding 60K, and the Total Value Locked (TVL) in Cardano's DeFi ecosystem has decreased to $382 million, representing a nearly 3% decline over the past 24 hours. The derivatives market further supports the bearish outlook, with trading volume declining by over 20% to settle at $2.65 billion, and open interest slipping by nearly 2% to $1.54 billion, indicating reduced participation from futures traders.

Technical Analysis and Outlook

Current technical indicators reinforce the bearish momentum for Cardano. The price has fallen below its 7-day Simple Moving Average (SMA) at $0.848 and breached the 24-hour pivot point of $0.837. The MACD histogram has turned negative at -0.0145, confirming the increasing bearish pressure. The Relative Strength Index (RSI), currently around 55.76, suggests that ADA is not yet oversold, implying potential for further downward movement toward lower support levels. Traders are monitoring the 38.2% Fibonacci retracement level at $0.780 as immediate support; a failure to hold this level could see the price target near $0.73.

While some community commentators have suggested the possibility of a "false breakdown" due to specific candle wicks, implying potential buyer intervention, the predominant technical signals and market data point to sellers maintaining control. Historical data indicates that similar Double Top structures on ADA's chart have often led to further collapses before eventual recoveries. For instance, a Double Top in May 2025 saw Cardano drop to $0.51 before recovering to $0.9373 in July. However, previous bullish signals, such as strong support above the Ichimoku cloud and moving averages, or a double-bottom pattern formed at $0.5025, have been superseded by the current bearish trend.

Broader Context

Cardano's current situation is indicative of broader uncertainties within the Web3 ecosystem, particularly concerning altcoins. The shift in investor capital towards Bitcoin underscores a flight to perceived safety amidst regulatory concerns and market volatility. The declining network activity and DeFi engagement for Cardano highlight challenges in maintaining competitive advantage against newer, utility-driven projects. This environment encourages a reevaluation of crypto allocations, with some analysts pointing to agile, product-focused projects, such as those in the PayFi sector, as viable alternatives that may attract capital reallocation from traditional layer-1 blockchains like Cardano, especially if adoption stagnates and broader market conditions worsen.