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Posted: February 10, 2025
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Posted: February 10, 2025
Cardano (ADA) took a hit, its price plunging almost 25% during last week, leaving many traders on the edge. However, just as the feeling of the market seems to be in discharges, a potential change of game has emerged.
The American federal reserve has announced that it will end its quantitative tightening policy (QT) by June, signaling a change under the conditions of liquidity.
This decision could have significant implications for risk assets such as ADA, which could prepare the way for prices overvoltage.
The recent decrease of 25% of ADA can be assigned to several factors.
Macroeconomic pressures played an important role; In particular, recent pricing threats from President Donald Trump against the main American trade partners have led to a net slowdown on the market, Bitcoin (BTC) lowering 7% and Ethereum (ETH) of more than 20%.
This larger sale on the market also affected ADA.
In addition, specific market conditions in Cardano have contributed to the decline.
A significant drop in the daily volume of negotiation DEX – against $ 31.3 million on December 12, 2024, to $ 7 million on February 6, 2025 – reflects the interest and participation of the ADA.
In addition, the TVL in the Cardano network increased to $ 355.7 million recently, compared to $ 701.4 million on December 3, 2024, indicating a reduction in commitment in its ecosystem.
The quantitative tightening policy of the federal reserve, initiated to reduce its assessment by selling titles and slowing down liquidity, was an important factor influencing the financial markets in the past year.
QT has tightened the liquidity conditions at all levels, exerting pressure on risk assets, including Cardano.
“To ensure a smooth transition, the FOMC slowed down the pace of the drop in its titles in June 2024 and intends to stop reducing its titles when reserve balances are a little above the level that FOMC judges are compatible with many reserves.”
In June 2024, the Federal Open Market Committee (FOMC) slowed down the Rhythm of QT, signaling its intention to end the reductions in titles when the reserve sales reach a level “a little above” of what is considered in accordance with the many reserves.
However, the exact moment remains uncertain, because it depends on the evolution of reserve sales and broader economic conditions.
This change of policy planned has crucial implications. The end of the QT could alleviate liquidity constraints, strengthening the confidence of investors and risks appetite.
For ADA and similar assets, the increase in liquidity could soften the sales pressure and encourage entries, potentially stabilize or reverse downward trends.
However, the prudent Fed approach means that any market relief can be progressive and subject to macroeconomic stability.
post url: https://altcoin.observer/?p=23746
