Cardano (ADA) Shows Growth Amid Positive Market Sentiment and Potential Bitcoin Cash Partnership
Summary:
Cardano (ADA) registered a significant increase at the start of the week, reflecting the overall bullish sentiment in the crypto market. The surge follows Cardano founder Charles Hoskinson's proposal for a partnership with Bitcoin Cash (BCH), which was positively received by the community in a poll. Moreover, ADA is seeing increased investment, shifting capital from Bitcoin, consolidating a larger share of the total crypto market capitalization. Signs indicate further strengthening of ADA against Bitcoin, while charts suggest an upward price target for ADA around $0.543 in May, given breaking above the neckline resistance.
Cardano (ADA) began this week on a high note, posting over a 3.70% increase to hit $0.476 on May 6, as indicated by the ADA/USD daily price chart. The surge in ADA is reflective of a general upward momentum across the crypto market, represented by the approximate 2.5% and 2.70% spikes respectively in the prices of market leaders Bitcoin (BTC), and Ether (ETH). This increasing uptake of crypto is linked to a less aggressive stance on the US Federal Reserve's monetary policy for 2024; this shift also works in ADA's favour due to several bullish factors explored below.
The rise in ADA's fortunes came in the wake of a proposition by Cardano founder Charles Hoskinson to forge a partnership with Bitcoin Cash (BCH). On May 4, Hoskinson initiated a "theoretical poll" on platform X to gauge users' response towards integrating Cardano with Bitcoin Cash. The poll conducted had accrued more than 14,360 votes by May 6, 68.1% of whom are in support. Hoskinson brought forth the term "partnerchain", indicating the need for Bitcoin Cash to either be bridged or cross-chained in order to align with Cardano's planned upgrades. However, settling on a technical model and reaching consensus among stakeholders and developers is still a challenge to be overcome.
The upswing in ADA's position today is primarily due to a capital transfer from Bitcoin, currently commanding over 50% of the crypto market's value, towards Cardano. On May 6, ADA/BTC pair observed a rise of 1.54% at 729 satoshis, while the Cardano Dominance Index (ADA.D), the measure of ADA's market cap against the total crypto market, showed an upward trend. This implies that ADA is not only gaining ascendancy over Bitcoin but also consolidating more of the total crypto market capitalisation. The shift in capital is evident in the net capital movement among the crypto funds in April with Cardano attracting $1.5 million, while Bitcoin and Ether saw outflows of $54 million and $123.8 million respectively, as per CoinShares' weekly report.
There are indicators hinting at ADA's further strengthening against Bitcoin, as reflected by a growing bullish divergence between ADA/BTC and its day-to-day relative strength index (RSI). This resembles a bullish divergence signal in October-November of 2023 that set off a 30% rally.
Today's gains for Cardano represent a technical bounce-back from its interim support level around $0.455. Interestingly, this support level aligns with the dip in the right shoulder of ADA's prevailing inverse-head-and-shoulders (IH&S) pattern. Using the IH&S patterns, ADA's upside target lies around $0.543 in May if its price eclipses the neckline resistance at $0.476.
On the other hand, a fall-back from the IH&S neckline could activate a head-and-shoulder setup, consistent with ADA's descending trendline resistance. If the pattern concludes, the price is expected to target $0.351, acting as a descending trendline support, by May.
Published At
5/6/2024 4:16:18 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.