Crypto analyst and trader Benjamin Cowen says buying pressure for Cardano has massively dropped since ADA printed its all-time high in September.
In a new strategy session, Cowen takes a look at the state of Cardano as ADA continues a downtrend that has taken the coin almost 60% down from its record high above $3.00.
The analyst puts the spotlight on ADA’s relative strength index (RSI), a momentum indicator that traders use to gauge whether an asset is overbought and in need of a correction, or oversold and due for a bounce.
On the weekly time frame, Cowen says that Cardano’s RSI suggests the seventh-largest crypto by market cap is significantly oversold.
“ADA, from a lot of different perspectives in my opinion, seems like it’s extremely oversold. One of the things we can look at… is the relative strength index on ADA… What’s interesting about this is that the last time the relative strength index for ADA was this low at around 37, the last time was back in March of 2020.
That’s not to say that this drop has been nearly as bad as what we’ve experienced back then… But what it does show is that in the grand scheme, ADA has been sold off on the weekly timeframe such that the relative strength index of ADA is the same that it was back in March of 2020, and also note that we are nearing the bottom of the range.”
Zooming in on Cardano’s daily RSI, Cowen says ADA is sitting at levels not seen since the deep local bottoms in the pandemic-induced crash of 2020 and the correction of September of the same year.
“You can see that we’re also near historic lows. That doesn’t mean we can’t go down anymore. I’m not saying that, but the level we just hit, not that far removed from the lows we’ve seen in the past in March 2020, and then September 2020.”
The analyst says that over the long term, ADA’s current correction will ultimately be remembered as one of the many sideways markets that preceded bull runs.
“Let’s see if the theory holds up that the cycles for Bitcoin should lengthen… If this one also lengthens, then I do think there’s a high probability that this will just be viewed in the future as just a long reaccumulation phase for ADA.”
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