Cardano (ADA) Price Prediction: ADA Likely to Test Annual Lows Around $0.39 Soon

Key Points

• Cryptocurrency sentiment is upbeat on Friday as strong US data ease recession fears and Fed tightening bets are wound in.
• Cardano has failed to take advantage of the improvement in sentiment, with a trendline capping its upside.
• It seems likely that ADA will test its annual lows around $0.39 soon.

Market Update

Cryptocurrency sentiment is upbeat on Friday, with major coins all advancing and speculative altcoins outperforming. Bitcoin was last trading higher by about 4.0% in the last 24 hours according to CoinMarketCap and was last changing hands just below $21,000. Ethereum, meanwhile, was last changing hands at around $1,230, up over 10% in the last 24 hours.

US data released on Friday argues for the Fed to “only” raise interest rates by 75 bps later this month, rather than the 100 bps move some analysts had been calling in wake of alarmingly high headline inflation figures released on Wednesday. US Retail Sales data released on Friday remained robust and Consumer Sentiment data was also better than expected, easing fears about a near-term US recession.

But that didn’t trigger fears that the Fed would become more emboldened to hike rates aggressively given the still robust economy, as the latest consumer inflation expectations numbers released by the University of Michigan showed a decline in consumer inflation fears. It is crucially important for the Fed to keep long-term inflation expectations anchored close to 2.0% in order to maintain its credibility, so the latest developments will likely ease fears at the bank.

Next week is a fairly quiet one so far as US macro events are concerned. Fed speak will be closely scrutinized, with the latest Fed members to have spoken all doubling down on thinking a 75 bps rate hike later this month as appropriate, rather than calling for a 100 bps move. As of Friday, the market-implied odds of a 100 bps rate hike later this month had fallen back to around 30% from as high as 75% on Thursday.

Cardano (ADA) Price Prediction

The native token to the Cardano blockchain ADA was last trading slightly in the red on Friday, as the cryptocurrency lags a broadly more upbeat crypto market. The cryptocurrency was last changing hands around $0.44 per token, still a healthy 9.0% up versus Wednesday’s lows near $0.40, but still down about 5.0% on the week.

ADA broke below a key level of medium-term support earlier in the week, an uptrend from the May annual lows. This uptrend which was formerly providing support has now turned into resistance and is capping ADA/USD upside for now.

The cryptocurrency’s failure to break back above this area of resistance suggests that the bears remain in control. A test of annual lows around $0.39 seems likely in the sessions ahead, assuming that the broad upturn in crypto risk appetite doesn’t go into overdrive in the coming days/weeks.

As noted in previous articles, $0.39 is a key area of long-term support for ADA. A break below it could open the door to a cascade of selling pressure that could push the cryptocurrency all the way below the $0.20s. That would be another 60% drawdown from current levels. ADA is already trading lower by about 85% versus its August 2021 record highs above $3.0.