The bearish signal observed on Cardano’s daily chart reflects the ongoing regulatory pressure against crypto.
The Impact of the Death Cross and SEC Lawsuit
Over the weekend, Cardano (ADA) experienced a ‘Death Cross,’. It’s a bearish technical indicator indicating potential downward price momentum and the possibility of a significant decline.
This occurrence comes two weeks after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, classifying ADA as a security.
Amidst Regulatory Pressure: The Death Cross Signal
The Death Cross occurs when an asset’s 50-day simple moving average crosses below its 200-day moving average.
According to TradingView, nearly all of Cardano’s moving average indicators are signaling a “sell” signal. Notably, the last time this asset displayed a Death Cross was in December 2021. It marked the beginning of a year-long downward trend for both Cardano and the broader crypto market.
In March, Cardano experienced a counterpart signal known as a ‘Golden Cross’ as several banks collapsed. Further, it led to a surge of capital into Bitcoin and other digital assets.
SEC Lawsuit and Price Decline: ADA Named a Security
Although the Death Cross is considered unreliable as an isolated indicator, its occurrence aligns with the SEC’s lawsuits against Binance and Coinbase, two of the largest global crypto exchanges.
In the Coinbase lawsuit, the SEC classified ADA as one of the dozen crypto assets labeled as securities. It caused significant price declines for most of them. Since the lawsuit, ADA has dropped by approximately 30% and is currently trading at around $0.25 per coin.