Cardano Sees Impressive Weekly Gain, But Risks Loom on Horizon
Summary:
Cardano (ADA) has seen an impressive upward trend over the past week, gaining over 8.5% to top $0.535 as of Feb. 8, with the majority (6.5%) increase happening within the last 24 hours. The surge is associated with a combination of technical signals, on-chain data, and infrastructural growth, as well as reflecting broader trends in the crypto market. It also capitalized on the network outage of its rival, Solana. However, the risk of a price drop exists, potentially pushing ADA's value down to around $0.421.
Over the past week, the value of Cardano (ADA) has been on the rise, registering an impressive gain of over 8.5% to top $0.535 as of Feb. 8. The majority of this surge, roughly about 6.5%, came within the last 24 hours, catalyzed by a combination of on-chain metrics, technical signals, and infrastructural advancements. Meanwhile, Bitcoin (BTC) and Ether (ETH), the two heavyweight cryptocurrencies in the market cap rankings, experienced increases of over 4% and 5.25% week-on-week, respectively.
Throughout its history, Cardano's correlation with Bitcoin has maintained a largely positive trend, and it was successful in surpassing 0.75 this week, as per the daily correlation coefficient. Such upward momentum points to a growing interest in crypto assets in general, spurred on by the recent U.S. greenlight for Bitcoin-focused spot exchange-traded funds (ETFs) and the anticipation associated with Bitcoin's next halving event slated for April.
Ikigai's Chief Investment Officer, Travis Kling, tied the crypto market rally—which subsequently bolsters ADA's price—to the Federal Reserve's rate cut policy. He stated, "A week ago, the market was pricing six cuts starting in March. Last week, [Jerome] Powell told you to go [in] March. Last night on 60 minutes, he told you three cuts, not six…result? Stocks up. Crypto up."
In parallel with wider market trends, network activity indicators on the Cardano blockchain have played a role in the recent price increase. The total value locked (TVL) across Cardano has risen from 660.30 million ADA to 720.91 million ADA in just 24 hours, reflecting an uptick in acceptance as more assets become locked in Cardano's smart contracts. The increase in Cardano's price in the last 24 hours coincided with a slight rebound in the count of daily active addresses and transactions.
Furthermore, the recent network outage experienced by rival blockchain Solana (SOL) on February 6 has positively impacted the ongoing surge in Cardano's price, as speculators seem to be reallocating funds from Solana to Cardano, possibly viewing the latter as a safer bet amidst the uncertainty.
Cardano's upward journey set off from a significant support point, where a horizontal trendline at $0.494 met the lower trendline of ADA's prevalent bear flag formation. As such, the crypto's price was poised for a higher climb towards the flag's upper trendline nearing $0.55 on February 8.
However, given that bear flags typically indicate a negative future pattern, there exists a heightened risk of a price collapse for ADA, dropping to the $0.421 ballpark. If this were to eventuate, ADA's target price by the close of February would be readjusted to around $0.421, signifying a rough 20% drop from the current levels.
In ADA's overall descending channel pattern – which looks similar to a bull flag – the bear flag's lower target aligns with the lower trendline (colored in purple). According to this pattern, ADA's price could potentially reach $0.72 by March or April. Nonetheless, potential investors should interpret this as news and not as definitive advice or recommendations as every trading and investment action carries its own set of risks and due research is mandatory before making a decision.
Published At
2/8/2024 6:12:52 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.