ADA Price Prediction: Return to $0.400 Hinged on US Stats and the SEC

Key Insights:

• ADA enjoyed a breakout session on Tuesday, rising by 7.80% to end the day at $0.387.
• US lawmaker scrutiny supported a sharp rebound, though regulatory risk and Fed Fear remain headwinds.
• The technical indicators turned bullish, bringing $0.400 into play.

ADA rallied by 7.80% on Tuesday. Reversing a 1.37% loss from Monday, ADA ended the day at $0.387. ADA revisited $0.390 for the first time in five sessions.

A bearish start to the day saw ADA fall to an early morning low of $0.355. Steering clear of the First Major Support Level (S1) at $0.347, ADA rallied to an early evening high of $0.393. ADA broke through the First Major Resistance Level (R1) at $0.368 and the Second Major Resistance Level (R2) at $0.378 to end the day at $0.387.

Cardano Network News and US Lawmaker Chatter Deliver Support

On Tuesday, Input Output HK (IOHK) announced that the Valentine upgrade went live. In a series of tweets, IOHK said,

“We are pleased to report that the Valentine upgrade – support for Plutus SECP cryptographic primitives – is now live on the Cardano mainnet.”

Providing details of the upgrade, IOHK added,

“Native support for SECP now fosters cross-chain interoperability while ensuring the highest level of security. With the Cardano Valentine upgrade, developers can now easily create cross-chain DApps that are secure, reliable, and cost-effective.”

The latest IOHK update provided further evidence of heightened developer activity on the Cardano network. Notably, the upgrade will support a further increase in developer activity, which is ADA price positive.

While IOHK news provided direction, chatter from Capitol Hill delivered a broad-based crypto rebound.

On Tuesday, the Senate Banking Committee held a hearing, Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets. Questions over Gary Gensler and the SEC’s regulation by enforcement and lack of SEC guidance to crypto firms highlighted Gensler and the SEC’s failings.

There were also calls for Gensler to testify sooner rather than later, with lawmakers noting Gensler’s appearances on morning talk shows.

Following the SEC moves against Kraken and Paxos and the BUSD stablecoin, the comments from the hearing suggest that Gensler is navigating beyond his remit, which could force lawmakers to rein in the SEC tasked with protecting retail investors.

The chatter from Capitol Hill and news of Citadel Securities Group investing in Silvergate Bank allowed investors to brush aside hotter-than-expected US inflation numbers from the US. In January, the US annual inflation rate softened from 6.5% to 6.4% versus a forecasted 6.2%.

The Day Ahead

IOHK network updates will continue to influence. However, SEC activity and lawmaker chatter from Capitol Hill will need consideration.

In the afternoon session, US retail sales figures for January and the NASDAQ Composite Index could also provide direction. Following the US CPI Report, a jump in consumer spending would support hawkish Fed policy bets, which would weigh on riskier assets.

ADA Price Action

This morning, ADA was down 0.26% to $0.386. A mixed start to the day saw ADA fall to an early low of $0.383 before rising to a high of $0.390.

Technical Indicators

ADA needs to avoid a fall through the $0.378 pivot to target the First Major Resistance Level (R1) at $0.402. A move through the Tuesday high of $0.393 would support a bullish session. However, Cardano network updates and the broader crypto market would need to provide support.

In the event of a breakout, ADA would likely test the Second Major Resistance Level (R2) at $0.416. The Third Major Resistance Level (R3) sits at $0.454.

A fall through the pivot ($0.378) would bring the First Major Support Level (S1) at $0.364 into play. Barring an extended broad-based crypto sell-off, ADA should avoid sub-$0.350 and the Second Major Support Level (S2) at $0.340. The Third Major Support Level (S3) sits at $0.302.

This morning, the EMAs and the 4-hourly candlestick chart (below) sent bullish signals.

ADA sat above the 100-day EMA, currently at $0.375. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A bullish cross of the 50-day EMA through the 100-day EMA would support a breakout from R1 ($0.402) to target R2 ($0.416) and $0.420. However, a fall through the 100-day ($0.375) and 50-day ($0.373) EMAs would give the bears a run at S1 ($0.364) and the 200-day EMA ($0.364).