Cardano faces downward pressure as it continues to be rejected at the 50-day EMA

Cardano (ADA) experienced a decline of more than 3% at the time of writing on Thursday, marking the second time this month that the price has failed to break above the 50-day exponential moving average (EMA). Buying pressure has weakened from retail investors, leading to a decrease in open interest (OI) and causing the funding rate to continue cooling off. On a technical level, ADA’s upward momentum is waning, increasing the risk of a deeper correction as the key support zone around $0.3826 faces a challenge.

Cardano losing strength from retail investors as market sentiment fluctuates

Cardano is gradually losing appeal among retail investors as the cryptocurrency market unexpectedly shifts to a risk-avoidance stance. This negative development is likely driven by the U.S. Senate Banking Committee’s sudden postponement of the digital asset market framework discussion — originally scheduled for Thursday — to the end of January, thereby increasing cautious sentiment across the market.

According to data from CoinGlass, ADA’s open interest (OI) has decreased by 2.70% in 24 hours, down to $826.15 million. This figure clearly reflects a capital outflow trend from the market, consistent with the weakening risk appetite among traders.

Notably, during the same period, ADA futures saw $1.29 million in liquidations on long (Long) positions, far exceeding the $226,910 in short (Short) positions. This indicates a strong sweep of bullish bets.

Meanwhile, the funding rate continues to plummet, currently at just 0.0004% at the time of writing, down sharply from 0.0076% earlier in the day. This development indicates a significant decline in traders’ willingness to hold long positions, further compounded by increasing liquidation pressure on longs.

ADA Derivatives Data | Source: CoinGlass## Weakening momentum increases the risk of a negative correction

Cardano is struggling to find momentum to break out of the downtrend formed from the peaks on October 27 and December 9, as the price repeatedly faces rejection at the 50-day EMA around $0.4158. At the time of observation, ADA has turned downward and retreated close to the short-term accumulation zone’s bottom, coinciding with the January 3 low at $0.3826.

Losing this critical support level could trigger a deeper correction wave, opening the possibility of the price falling back to the December 31 low around $0.3294.

In terms of momentum, the MACD indicator still maintains a positive histogram, but the height of the bars is shrinking significantly, indicating weakening bullish momentum. However, the MACD line and signal line remain above zero, suggesting a mildly positive trend that has not been completely broken.

Daily ADA/USDT Chart | Source: TradingView Meanwhile, the RSI oscillates around 52 — a typical neutral zone during sideways accumulation phases. If buying interest improves early, ADA still has room to extend its recovery. Conversely, a decline in momentum will increase the risk of breaking below the $0.3826 support.

In a more optimistic scenario, if ADA avoids closing below this support zone, the recovery trend remains intact, with the immediate target being to retest the 50-day EMA at $0.4158.