Cardano (ADA) Price Prediction: ADA Could Surpass $0.50 or Retest $0.40 on Pennant Break

Key Points

• Major cryptocurrencies are backing off from weekly highs printed earlier in the day ahead of US jobs data.
• Crypto bulls will be hoping for evidence of a softening jobs market/lower wage pressures to discourage aggressive Fed rate hikes.
• Cardano has formed a pennant, a break of which could see it swiftly surpass $0.50 or drop to $0.40.

Market Update

Cryptocurrency prices have mostly backed off from earlier session highs in recent trade amid a bout of pre-US jobs data profit-taking across the space. But most major coins remain close to weekly highs and still trade with decent gains in the last 24 hours, according to CoinMarketCap.

The world’s largest cryptocurrency by market capitalization Bitcoin was last trading near the $21,400 level, down around 4.5% or close to $1,000 from earlier session and weekly highs in the $22,400 area. On the day, BTC/USD trades about 1.0% lower. But the cryptocurrency is still up around 4.5% in the last 24 hours. At current levels, it has a market cap of just under $410 billion.

The second-largest cryptocurrency by market cap Ethereum was last down just shy of 2.0% on Friday in the $1,210 area. It rejected a test of late-June highs at $1,280 earlier in the session. But over the last 24 hours, ETH/USD it still trades higher by about 2.5%.

Bitcoin and Ethereum have both clocked gains in excess of 10% so far this week, boosted in tandem with strength in the US (and global equity space). According to its pre-open price in the futures market, the tech-dense Nasdaq 100 index is on course to gain just shy of 4.0% this week.

Over the last few quarters, cryptocurrencies have developed a close relationship with US tech stocks. Both are seen as highly speculative assets that have suffered in 2022 as economic uncertainty has risen and central banks have moved to tighten financial conditions.

All Eyes on US Jobs Data

Crypto traders now have their sights set on the release of the official June US labor market report at 1230GMT. The US labor market has been a source of strength in the US economy in recent months as real incomes have taken a hit due to inflation and consumer spending/sentiment has suffered.

The US Federal Reserve will be watching the report closely. Strong job growth and low unemployment numbers would help give it confidence the US economy can “handle” aggressive rate hikes. The Fed raised interest rates by 75 bps last month, the largest hike in 28 years.

The minutes from that meeting, released this week, revealed that the Fed accelerated rate hikes due to concerns about a deterioration in the near-term inflation outlook. Indeed, with inflation in the US at multi-decade highs, the Fed (and markets) will be closely scrutinizing the Average Hourly Earnings growth metric in the upcoming jobs report.

An acceleration in wage growth can lead to higher inflation down the line. The Fed will thus be hoping to see wage pressures subside. The best outcome for cryptocurrency markets would be a jobs report that lowers the risk that the Fed hikes interest rates by 75 bps again this month.

For more on how the upcoming US jobs report might impact crypto, click here.

Cardano (ADA) Price Prediction

The native token to the Cardano blockchain ADA has pulled back from the weekly highs it printed earlier in the session in tandem with pre-US jobs data selling pressure being seen across crypto markets. ADA/USD came close to touching the $0.50 level earlier in the day. The pair is trading back in the $0.46s, down just over 2.0% on Friday.

According to CoinMarketCap, ADA is flat over the last 24 hours and on course to rise about 2.5% this week. But technicians note a growing risk that the cryptocurrency breaks out of the mid-$0.40s to low-$0.50s range of the past few weeks.

Indeed, ADA/USD has formed a pennant structure since the middle of June. If Friday’s US jobs data triggers a broader crypto move, a breakout seems likely. A bullish breakout would be triggered when ADA/USD surpasses earlier session highs around $0.4930 and above $0.50.

This would open the door to a test of the 50-Day Moving Average at $0.51. A break above here would likely see the late June highs at $0.5250 and $0.5450 tested. A bearish breakout would be triggered by a move under $0.45 and open the door to a swift test of June lows in the $0.42s.

Bulls should be aware that a downside break of the current pennant could be catastrophic for Cardano. While the cryptocurrency has formed the current pennant since mid-June, it has been supported by an uptrend since printing sub-$0.40 annual lows back in May.

A break below this uptrend could open the door to a retest of annual lows. A break below the $0.40 level, a key long-term zone of support, could trigger a drop all the way below $0.20. That’s a further more than 50% decline from current levels.