Cardano's Value Drops Amid Centralization Critique; Whales Expect Future Gains
Summary:
After cryptocurrency analyst Justin Bons criticized Cardano (ADA) for its centralization, the value fell by 7.25%. A bearish setup may result in a 30% price decline by June. Despite a potential symmetrical triangle breakdown which could cause further price drops, ADA's value is demonstrating a bounce after testing its ascending trendline. Concurrently, Cardano whales continue to increase their ADA holdings, indicating anticipation of future price gains.
The value of Cardano (ADA) has seen a drop of 7.25%, decreasing to $0.474 on May 22, following statements made by cryptocurrency analyst Justin Bons calling the blockchain project exceedingly centralised. These remarks referred to the fact that Input Output Global (IOG), Cardano's parent organisation, holds 5 of the 7 "genesis keys" of the blockchain. These were the cryptographic keys used to authenticate and create the first block of the Cardano blockchain back in 2015.
Bons added that these genesis keys allow seamless code modifications without a hard fork, meaning IOG has the potential to stop the chain, modify emission schedules, censor and exert control to an extent that is unheard of for an L1 chain.
Following Bons's comments, ADA experienced a negative move that could potentially result in an additional 30% price drop by June. This correction in Cardano's trajectory took place after ADA reached a previously encountered declining trendline resistance, part of a current symmetrical triangle pattern.
In a downtrend, a symmetrical triangle is perceived as a bearish continuation pattern, featured by two intersecting trendlines: one ascending, one descending. Per established technical analysis, this pattern often resolves when the price falls below the lower trendline and descends by the maximum triangle height.
As of May 22, ADA's price was being adjusted after challenging the triangle's upper trendline, indicating an extended withdrawal toward the lower trendline, around $0.44, a decrease of 6.5% from the current pricing level, by the end of May.
If Cardano experiences a definitive symmetrical triangle breakdown, it could result in ADA's value decreasing toward the $0.336-0.366 range—a 20-25% drop from the current pricing level, depending on the exact point of breakdown. Despite this, ADA's price shows a rise following a test of the multi-month ascending support trendline.
An extended rally is foreseeable if the price successfully surpasses both the 50-3D (the red wave) and 200-3D (the blue wave) exponential moving averages (EMA), resulting in ADA's preliminary upward target at around $0.67—an increase of around 35% from its current market value.
While ADA's price adjustment proceeds, a slight increase in the concentration of ADA among its wealthiest investors has been observed, suggesting these entities continue accumulating ADA despite Bons's critiques of Cardano's degree of centralisation. Large scale entities, holding 10 million-100 million ADA and 100 million-1 billion ADA tokens, have boosted their assets over the past day. This indicates that most whales are capitalising on this market dip, hoping for subsequent profits.
There has been a steep influx in ADA assets around the end of March by the 10 million-100 million group, followed by stabilisation, while the 100 million-1 billion group has seen a steady increase since mid-March. During the same period, ADA's price dropped by more than 20%, suggesting anticipation of further price increases in the future among the majority of Cardano whales.
This article should not be treated as financial advice. Every trading and investment action entails risk and readers should undertake their own examinations before making decisions.
Published At
5/22/2024 9:13:32 PM
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