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Cardano Price Prediction: ADA Tests Key $0.51 Support Zone as Bears Growl Ahead of US CPI Data

By:
Joel Frank

ADA bulls continue to target a bullish breakout above $0.55, but a return to sub-$0.50 levels also looks possible.

Cardano

Key Points 

  • Cardano has been pulling lower in the last few days and is probing key support ahead of US CPI data. 
  • ADA was last changing hands near $0.51 and still eyeing a bullish ascending triangle breakout towards the $0.67-69 area.  
  • But if the uptrend from mid-July is broken, ADA could quickly fall back to sub-$0.50 levels.  

ADA, the native token that powers the Cardano blockchain, dipped 4.5% on Tuesday amid a broadly downbeat tone to cryptocurrency markets at the time and is down a further 0.5% on Wednesday as traders await the upcoming release of US CPI data for July that could trigger significant near-term volatility in cryptocurrency markets.  

ADA’s latest drop has seen it pull back from recent highs in the $0.55 area and it is now testing a key support area in the $0.51 region. For now, the 21-Day Moving Average at $0.5080 is offering support. Meanwhile, ADA is also seemingly benefitting from some buying interest ahead of an uptrend that has been supporting the price action since mid-July.  

As noted in prior articles, ADA’s technical outlook has been looking bullish as of late, with the cryptocurrency having formed an ascending triangle, with a bullish breakout above $0.55 likely to open the door to a swift rally towards the next major area of resistance in the $0.67-69 area.  

ADA/USD
ADA/USD bulls still hoping for an upside break. Source: FX Empire

However, a downside break of the aforementioned uptrend from mid-July, perhaps triggered if US inflation data comes in hotter than expected, could see ADA/USD slide quickly back under $0.50, below the 50DMA just above $0.48 and onwards towards recent lows in the $0.40 area.  

ADA/USD
ADA/USD also at risk of a downside move. Source: FX Empire

Institutional Investors Add to ADA Bets 

According to CoinShare’s weekly Digital Asset Fund Flows report, digital assets saw a further inflow of $3 million in the week just gone, taking inflows in the last six weeks to $529 million. Whilst Bitcoin saw outflows of around $7.5 million, Ethereum saw inflows of around $16 million, with analysts suggesting heightened investor demand for the cryptocurrency ahead of next month’s Merge.  

Cardano also saw another week of positive inflows of around $200,000, with its blockchain also expected to see a major near-term upgrade. The so-called Vasil hard fork, which is set to drastically improve Cardano’s scalability, is likely to go ahead later this month, with Input Output Global (Cardano’s developer) CEO Charles Hoskinson recently saying he didn’t expect any further delays.  

Cardano Priced Aggressively Ahead of its Vasil Hard Fork  

Cardano is being priced “aggressively” ahead of its Vasil hard fork, cryptocurrency market intelligence firm Messari said in a tweet on Tuesday, noting that the upgrade will “bring significant improvements to Cardano, specifically higher throughput and smart contract enhancements”.  

Messari ranked Cardano alongside a few of its closest competitors including Solana, Algorand and Tezos according to usage and financial metric ratios. While Cardano generates the highest annual revenue out of the aforementioned blockchains of close to $3.7 million and has the highest market capitalization (currently close to $17.3 billion), its active user, transaction and DeFi Trade Value Locked (TVL) multiples suggest the cryptocurrency may be somewhat overpriced.

Cardano’s daily active addresses are just 61,000 to Solana’s 243,000, giving it an active user multiple of 247 versus Solana’s 51, according to Messari. Cardano’s daily transactions clock in at around 62,000 versus Solana’s over 38 million, giving it a transaction multiple of 240 to Solana’s 0.3. Meanwhile, Cardano less than $120 million in TVL gives it a TVL multiple of 127, compared with Solana’s nearly $2.0 billion in TVL and multiple of 6.4.  

About the Author

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018. Joel specialises in the coverage of FX, equity, bond, commodity and crypto markets from both a fundamental and technical perspective.

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