The intensified selling pressure, spurred by a 12% drop in the Japan index and growing recession fears, contributed to a bloodbath in the crypto market.

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Cardano price witnessed a substantial price decline during Monday’s trading session, hinting at a potential bearish breakdown below the crucial $0.3 price level. This downturn was largely driven by a 12% plunge in the Japan index, which, coupled with rising recession concerns, triggered a sell-off across the crypto market.

Although the bearish momentum showed signs of easing during U.S. trading hours, major altcoins continued to experience difficulties in forming a market bottom.

Cardano Price Discovers Critical Support Within Channel Pattern

A technical analysis on the daily time frame chart reveals a significant correction in Cardano price over the past two weeks.

Amidst this market correction, the ADA price dropped from $0.45 to $0.308, registering a loss of 31.5%, while the market cap also fell to $11.162 billion.

A deeper analysis of the technical chart reveals that this downfall contributed to the formation of an expanding channel pattern. Typically, a coin price resonating between two diverging trendlines indicates market uncertainty and a lack of clear initiative from either buyers or sellers.

If the broader market selling persists, the ADA price could tease a bearish breakdown below the lower trendline at $0.28. If successful, the selling pressure will accelerate, plunging the altcoin 15% down to seek support at $0.24.

Furthermore, the Global In/Out of the Money (GIOM) metric for Cardano presents a rather bleak outlook. Currently, 28.1 billion ADA tokens are ‘out of the money’ (bought at prices higher than the current market price and thus at a loss), compared to only 5.7 billion tokens that are ‘in the money’ (purchased at lower prices and currently profitable). This imbalance indicates a less stable investor base, potentially leading to heightened susceptibility to panic selling.

Moreover, the number of large transactions has significantly decreased since early July, dropping from 6.5k to 3.02k, registering a 56% decline. This substantial reduction in high-volume trades could indicate waning interest among major investors or a shift towards a more cautious approach in the market.

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