Cardano (ADA) Price Prediction: Can ADA Break Above $0.4750 on US NFP?

Key Points

• Cryptocurrencies are trading with a positive bias in what has thus far been a quiet session on Thursday.
• Markets await data on Friday that should indicate a still robust US labor market, which may underpin Fed tightening bets.
• Cardano is eyeing a breakout of the $0.44-0.4750ish ranges that have been in play since late June.

Market Update

Cryptocurrencies are trading with a positive bias in tandem with an upbeat tone to global equity markets in what has thus far been a quiet session on Thursday. Wednesday’s robust US ISM Services PMI data and strong JOLTs Job Openings report, whilst pushing back on the idea that the US is currently in recession, did not impact macro sentiment too notably.

Some have argued that the weaker US economic data, the better for crypto, as weak data implies a less hawkish US Federal Reserve. Speaking of, markets and cryptocurrency prices also didn’t react much to Wednesday’s release of the minutes from the Fed’s June meeting. While unequivocally hawkish in tone, the minutes did not offer up any information that Fed Chair Jerome Powell hadn’t already outlined in last month’s post-meeting press conference.

For reference, the minutes cited a deterioration in the near-term inflation outlook to justify last month’s 75 bps rate hike (the largest hike in 28 years), as expected. They also showed FOMC policymakers are intent on implementing another rate hike of at least 50-75 bps at the next Fed meeting (later this month), also as expected.

Bitcoin was last trading with gains of just over 2.0% in the last 24 hours near $20,500, according to CoinMarketCap. Ethereum, meanwhile, was last trading with gains of just shy of 5.0% over the same time period just below the $1,200 mark. There is little by way of important macro events on the economic calendar this Thursday that could spark any notable volatility.

Instead, focus has already shifted to Friday’s US labor market report. The official jobs data courtesy of the US Bureau of Labor Statistics is expected to show a slowdown in the pace of job gains to under 300K in June from nearly 400K back in May. The unemployment rate is seen remaining unchanged at 3.6%, around pre-pandemic levels. The YoY rate of wage increases is seen waning slightly to 5.0% from 5.2% in May.

The upcoming labor market report is thus expected to show that the US jobs market remains a source of strength for the US economy. Indeed, the strong jobs market is one reason why the Fed has confidence that it can still manage a “soft-landing”. That basically means getting inflation under control with rate hikes whilst avoiding a recession.

Strong jobs data thus presents a potential downside risk to assets that want to see the Fed adopt a less aggressively hawkish stance. If the numbers were to come out substantially worse than expected, that could contribute to hopes that US inflation has peaked, to fears that the US is nearing recession and to a paring back of Fed tightening bets. Crypto could perform well in such an environment, so long as stocks do too.

Cardano Eyes Breakout

The native token to Cardano’s blockchain ADA has continued to trade with a slightly positive bias thus far on Thursday, in tandem with a broader pick-up in cryptocurrency prices. ADA/USD was last trading near $0.4650 per token, about 2.0% higher in the last 24 hours according to CoinMarketCap.

But the pair is still trading well within the $0.44-0.4750ish ranges that have thus far largely held this month. As has been the case with other cryptocurrencies, trade is being contained by the proximity of upcoming important macro events (as mentioned above). Resistance in the $0.4750 area in the form of recent highs and the 21-Day Moving Average are also doing their best to keep the price action contained. Meanwhile, an uptrend from the end of June has been providing support.

Traders suspect that once upcoming macro events reveal more information on the state of the US economy and the outlook for Fed policy, cryptocurrencies like Cardano will break out of recent ranges. If ADA/USD muster a push above $0.4750 on positive macro developments, it ought to be in with a shot of hitting its 50DMA just above $0.51. A break above here could open the door to a run back to early June highs in the upper-$0.60s.

Bear in mind that Cardano developers are expected to deliver on the much-anticipated Vasil hardfork upgrade later this month. A successful fork onto a blockchain with superior capabilities could be a big positive catalyst for the cryptocurrency, helping drive any such bullish moves.

Of course, there is no guarantee that everything works out as well as outlined above. There is every possibility that data coming out this month reveals US inflation to have continued to accelerate in June and growth to have weakened more than expected. Meanwhile, the Fed is expected to continue to deliver on aggressive tightening, with markets expecting another 75 bps rate hike later this month.

In a bearish scenario, Cardano could break below the uptrend that has been supporting it since it hit annual lows back in mid-May. This would open the door to a run back lower towards the $0.40 level. A break below here and the current annual low (at $0.39) could trigger a cascade of selling pressure all the way back to mid/late-2021 highs under $0.20. That would mean a further more than 55% drop from current levels.