After a strong bounce in June, Cardano is now testing a major area of interest that has held as a major resistance area in the past.
Will upcoming catalysts be enough to break it higher or will the bears take control?
Upside Breakout Ahead for Cardano?
Today we’re taking a look at the Cardano project, a proof-of-stake blockchain platform with a strong emphasis on peer-reviewed research and development.
Price action has been relatively choppy for ADA/USD in 2021 as it’s been sticking around the$1.10 – $1.50 handle for the most part. May was an outlier of course as the crypto markets saw a massive spike in volatility on both crypto adoption optimism (e.g., Goldman Sachs is close to offering bitcoin and other digital assets to its wealth management clients, European Investment Bank Issues $121M Digital Notes Using Ethereum) and negative news stories (e.g., Bitcoin plunges 14% due to power outage in China, Musk Sends Bitcoin Tumbling With Shock U-Turn on Payments), but it seems like we’re past the drama for now in the crypto space, and ADA/USD seems to be back to trading steadily in its previously mentioned range.
Looking forward, we have a few potential catalysts for ADA, most of which are seen to be potentially bullish, most notably the launch of the Alonzo smart contract. With the ability for new apps to be built on Cardano, this could accelerate the adoption of the project and potentially could be a boost in the relative value of ADA.
Other potential bullish catalysts for the crypto asset is addition of ADA to Grayscale’s Digital Large Cap Fund, news that over 70% of the circulating supply of ADA is now staked (effectively reducing the supply of ADA that can be bought), and various strategic partnerships in the works (e.g., Cardano partners with crypto lending player Nexo, Cardano Africa Special reveals second major partnership with Tanzania).
So, there’s a lot of potential for the June bounce to turn into a new leg higher, but from a technical standpoint, ADA/USD will have to break above the major area of interest around $1.50 and the 50-day moving average before we consider it a legit break of the range.
We’ll be watching out for that price signal and for more positive news on Cardano’s smart contract development before considering a long play on ADA/USD.
Of course, if broad global risk sentiment sours or the crypto markets see another round of negative headlines, then that 50-day MA / previous resistance area could draw in lots of bears and short-term bullish profit takers.
With several potential scenarios in play on different time frames out there and big potential for volatility ahead, Cardano needs to stay on the watchlist for quite some time.
What do you guys think? Will Cardano get the news to break above the technical area of interest? Or will the bears be quick to short ADA soon in July?
Let me know in the comments below or visit a forum discussion on ADA, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.