- SEC’s ADA security claim led to a 40% price drop, indicating market uncertainty and regulatory risks.
- Lawsuit withdrawal reversed ADA’s decline to 4%, but investor caution persists amid ongoing volatility.
- ADA’s price consolidation near 0.75 suggests accumulation; breakout above 0.80 could indicate bullish momentum.
The U.S. Securities and Exchange Commission (SEC) had recently classified Cardano’s native token, ADA, as an unregistered security. This action came as part of lawsuits against major exchanges Binance and Coinbase.
Input Output Global (IOG), the company behind Cardano, strongly denied the SEC’s claim. IOG argued that ADA does not meet the criteria to be classified as a security under U.S. law. The Cardano Foundation also opposed the classification.
ADA to Drop 40%
Following the SEC’s action, ADA’s price dropped by 40%, showing uncertainty in the market. Investors reacted strongly, leading to selling pressure. The classification of ADA as a security posed regulatory risks, affecting market sentiment. As legal disputes continued, ADA struggled to recover from its sharp decline.
SEC Drops the Case, ADA Reverses Declines to 4%
The SEC later agreed to drop its lawsuit against Coinbase. This decision, however, required final approval from an SEC commissioner.
According to Coinbase CEO Brian Armstrong, if the withdrawal was finalized, it would be a defining moment for the crypto industry. Armstrong emphasized its importance for millions of crypto holders in the U.S. and globally.
After the positive news, ADA reversed its decline to 4%. While the lawsuit dismissal brought relief, investors remained cautious. The legal battle had already caused increased volatility, and ADA struggled to regain its previous levels.
Price Levels and Market Indicators
At press time, ADA was trading at $0.7651, consolidating near a support level at $0.75. The price has declined from over $1.20 in December, entering an accumulation phase.
A breakout above $0.80 could indicate a bullish reversal, while a breakdown below $0.75 may lead to further losses. The daily trading volume is at 33.17 million, lower than previous sell offs, suggesting reduced selling pressure.
The RSI is at 43.56, below the neutral 50 mark, indicating weak buying momentum. However, the RSI’s flattening trend suggests market indecision. A move above 50 could lead to a bullish momentum, while a drop below 40 may signal further declines.
According to analyst Ali, ADA’s critical support zone is between $0.67 and $0.80. As long as this level holds, bullish momentum could persist. The MACD line shows a bullish crossover, hinting at a potential upward move. However, the histogram remains near the zero line, indicating weak momentum.
February 23 Key Scenarios
If ADA breaks above $0.80 with increased volume, it could go to $0.82 – $0.85. A strong push beyond $0.95 may invalidate the bearish outlook, targeting $1.20. However, if the price falls below $0.75, a decline toward $0.72 – $0.70 could follow.
A breakdown below $0.65 might lead to further losses around $0.55 or lower. The next move depends on volume activity and momentum confirmation. Market sentiment is cautious as there are regulatory developments which could be influential.
