The Cardano price has retreated after having a remarkable rally last week. ADA has dropped to $2.1697 amid the ongoing sell-off of cryptocurrencies. It has a market cap of more than $67 billion, making it the sixth-largest digital currency in the world.
What happened: The Cardano price rallied last week as investors looked for a better alternative to Bitcoin after Tesla decided to abandon Bitcoin. Social media users in platforms like Twitter and Reddit promoted the currency as a viable alternative because of its proof-of-stake technology.
There are several reasons why ADA is falling today. First, the decline is because of the overall sell-off in Bitcoin and other altcoins. Indeed, looking at CoinMarketCap shows that most cryptocurrencies are in the red. Second, ADA has fallen because of profit-taking as investors bank-in their recent gains.
Third, there are concerns about the current monetary state as more investors start pricing in higher interest rates by the Federal Reserve. This is after data showed that inflation is currently at the highest level in more than 13 years. Tightening by the Federal Reserve could lead to weaker cryptocurrency prices. Finally, there are concerns about Tether, which recently disclosed that its holdings are backed by less than 3% fiat currencies.
On the daily chart, we see that the ADA price is having its first losing day in five days. The token is trading at $2.16, which is still above the 50-day and 100-day moving averages. The price is still slightly above the 23.6% Fibonacci retracement level and the psychological level at $2.00.
Therefore, in my view, I suspect that ADA has a chance of bouncing back above its all-time high at $2.46 in the short term as investors rush to buy the dips. Nonetheless, a drop below the 23.6% retracement at $1.900 will invalidate this prediction.
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