• Cardano is down over 3% on Thursday, extending the nearly 2% decline from the 50-day EMA on the previous day.
• Derivatives data indicate a bearish bias as funding rates and Open Interest decline.
• The technical outlook for Cardano shifts bearish as momentum wanes.

Cardano (ADA) edges lower by over 3% at press time on Thursday, extending the second rejection from the 50-day Exponential Moving Average (EMA) so far this month. A bearish side in the retail interest leads to a decline in Open Interest and lowered funding rates. Technically, Cardano risks further decline, with the $0.3826 support at risk as bullish momentum wanes.

Cardano loses retail strength as market sentiment shakes

Cardano is losing retail interest amid a sudden shift to risk aversion in the broader cryptocurrency market, likely linked to the US Senate Banking Committee abruptly postponing its discussions on the digital asset market structure markup, initially scheduled for Thursday, until late January. CoinGlass data shows that ADA Open Interest (OI) is down 2.70% over the last 24 hours, to $826.15 million, signaling capital outflows and aligning with traders' lowered risk appetite.

Over the last 24 hours, ADA futures have recorded $1.29 million in long liquidations, surpassing the $226,910 in short liquidations and reflecting a larger wipeout of bullish-aligned positions. 

Additionally, the declining trend in funding rates, standing at 0.0004% at the time of writing, down from 0.0076% earlier in the day, suggests reduced interest among traders in holding bullish positions, consistent with a spike in long liquidations. 

Declining bullish momentum risks a bearish climax to short-term consolidation

Cardano struggles to extend the breakout of a descending trendline connecting the October 27 and December 9 highs, beyond the 50-day EMA at $0.4158. At the time of writing, ADA reverses toward the base of a short-term consolidation range, marked by the January 3 low at $0.3826. 

If ADA punctures this level, the correction phase could further extend toward the December 31 low at $0.3294.

The Moving Average Convergence Divergence (MACD) histogram remains positive but is contracting, suggesting that bullish momentum is fading. Additionally, the MACD and its signal line hold above zero, maintaining a mild positive bias. 

The RSI stands at 52 (neutral), consistent with consolidation. A reacceleration in momentum could extend the advance, while a loss of traction would risk a pullback below $0.3826.

If ADA avoids a daily close below $0.3826, it would keep recovery attempts alive, potentially sending it back to the 50-day EMA at $0.4158.

(The technical analysis of this story was written with the help of an AI tool.)