Cardano Price Struggles: Bearish Technical and Onchain Signals Indicate Further Downside

Cardano (ADA) has continued its downward trend on February 24, with the price dropping 5% over the last 24 hours to $0.73. This marks the second consecutive day of bearish action, and several technical and onchain indicators suggest that the downward pressure may persist in the coming days. Let’s explore the factors contributing to ADA’s underperformance and what could be in store for the token.

ADA Underperforming Against Bitcoin

The recent decline in ADA’s price is part of a broader trend where Cardano has underperformed Bitcoin (BTC) over the past 90 days. Data from Markets Pro and TradingView shows that ADA has dropped approximately 32% in its USD pair, while Bitcoin has only seen a 2.3% decline in the same period.

This trend is concerning for investors, as it indicates a diminishing confidence in ADA relative to Bitcoin. In late 2024, ADA had enjoyed a 193% rally against Bitcoin, pushing its ADA/BTC ratio from 0.00000470 on November 6, 2024, to 0.00001380 on December 3, 2024. However, since then, the ratio has fallen 45%, reaching a 12-week low of 0.00000554 on February 3, 2025.

The decline in the ADA/BTC ratio signals a broader weakening of investor sentiment towards ADA, which is further compounded by reduced network activity within the Cardano ecosystem.

Weakening Onchain Metrics and Diminishing Network Activity

The downward movement in ADA's price is also tied to weak onchain metrics, suggesting a decline in Cardano’s ecosystem fundamentals. Since November 2024, key onchain indicators, such as daily decentralized exchange (DEX) trading volume, active addresses, and total value locked (TVL), have been trending lower.

Cardano’s daily DEX trading volume fell dramatically from $31.3 million on December 2, 2024, to just $2.7 million on February 23, 2025 — the lowest level since November 7, 2024. Alongside this, daily active addresses on the network dropped by 77%, from approximately 113,500 in late November to 25,900 by February 23.

Similarly, the total value locked (TVL) in Cardano has plummeted from $701.4 million in early December to around $366 million today. This decline in network activity and value locked within the ecosystem directly correlates with the 22% price drop in ADA over the same period.

ADA Forms Bearish Chart Pattern

On February 24, ADA confirmed the completion of a bearish chart pattern known as the bear flag. This technical formation suggests that ADA could see further declines if it fails to hold key support levels.

ADA’s price is currently testing the support level at $0.73, a crucial point in determining the next move. Should ADA fail to hold this level, the next major support zones to watch are $0.65 — the base of the bear flag — and the February 3 low of $0.512. A high-volume move below these levels could trigger a more aggressive sell-off, with the technical target for the pattern pointing to $0.43, which would represent a 41.5% decline from the current price.

Bearish Momentum: RSI Indicates Room for Further Decline

The Relative Strength Index (RSI), a key momentum indicator, is showing signs of increased bearishness. Over the last four days, the RSI has dropped from 48 to 40, signaling that the selling pressure is intensifying. An RSI value of 40 suggests that ADA still has room to fall before reaching oversold conditions.

Potential for Reversal

While the bearish outlook is currently prevailing, there is a potential for a reversal if ADA can reclaim key resistance levels. A daily close above the lower boundary of the bear flag at $0.77 would invalidate the bearish scenario and could indicate further consolidation within the pattern. In that case, ADA could continue to trade sideways for a few days before potentially testing higher levels.

Conclusion: Further Downside Risks for ADA

Cardano’s price is currently under significant downward pressure, influenced by weak onchain metrics, bearish technical patterns, and underperformance against Bitcoin. If ADA fails to hold key support levels in the coming days, the cryptocurrency may see further declines, with the next major target around $0.43. However, any break above $0.77 could provide a glimmer of hope for a bullish reversal.

Traders and investors will need to closely monitor ADA’s price action in the coming days, as these technical levels will likely determine the next significant move for the cryptocurrency.