In lawsuits filed against Binance and Coinbase, the SEC claimed that some altcoins are securities.
Among these altcoins, Cardano (ADA), which is among the top 10 cryptocurrencies, was also included.
After these lawsuits, while many crypto exchanges delisted ADA, there was a significant decrease in price.
The technical pattern called "death cross" was seen in the daily price chart of ADA, which experienced a decrease of about 30%.
What is the Death Cross?
Death-Cross: The short-term average crosses the longer-term average from top to bottom. This intersection is considered important as a sign of great weakness.
That is, this pattern occurs when a shorter-term moving average, such as the 50-week, falls below a longer-term moving average, such as the 200-week.
Accordingly, on Cardano's daily chart, we see that the 50-day average crosses the 200-day average from top to bottom.
Technically speaking, this pattern is interpreted as a sign of a potential uptrend reversal and the start of a downtrend.
However, looking at the graph of ADA, it is observed that the death cross model was also seen on March 21, 2023, and the price increased by 35% after this intersection.
Considering that the last crossover also took place after a 35% decrease, it means that this is a late signal for the current price movement and this intersection cannot be interpreted as a continuation of the decline alone.
Scenarios where derath cross is successful are usually those in which bull markets eventually occur when the price first enters a downtrend.
Death crosses at the bottom of bear markets are often misleading and do not yield successful results.
ADA continues to trade at $0.2533 at the time of writing.
*Not investment advice
