Cardano – Bullish or Bearish Now?

ADA, the native currency of Cardano, is trading above 1.3 USD now. The all-time high of ADA was 2.45 USD on May 16, 2021. Just one year back, this cryptocurrency was trading at 0.13 USD. The phenomenal growth of ADA has really surprised the market analysts and the cryptocurrency has flipped DOT, XRP to grab the 5th rank with a market capitalization of 41B+ USD. 70% of ADA supply is currently staked and it also shows the investors' confidence in the project.

Charles Hoskinson, a co-founder of Ethereum, left the Ethereum project due to some disputes and started the Cardano project in 2015. The blockchain was launched in 2017 with much hype and it was one of the first blockchains with a proof-of-stake consensus mechanism. The project aims to develop a smart contract capable blockchain with a layered structure. Unlike other projects, Cardano relies upon academic research and wants to build the project through scientific philosophy.  The developmental speed of the project has been really slow due to its approach but that didn’t stop Cardano to grab investors’ eyeballs. Cardano is going to attain much anticipated smart-contract functionality through a major protocol update soon.

There are five eras in the Cardano development roadmap: Byron, Shelley, Goguen, Basho and Voltaire. Currently, the Goguen era is ongoing and the project is poised at a critical juncture. The Goguen phase is divided into three stages - Allegra, Mary and Alonzo. Alonzo brings the smart-contract capability to Cardano but it was delayed. Presently, Alonzo is in the testnet stage and the team says that the developments are very much on track. Alonzo mainnet launch can be the watershed moment for the Cardano blockchain as DAPPs will be able to run on the blockchain. Polymarket, a prediction platform on Ethereum, has launched a prediction market where people are betting on whether Cardano will support smart contracts on Mainnet by October 1st, 2021 or not. Maximum people are paying higher prices for saying ‘No’ there!

Image Source - Polymarket

Cardano has a vibrant and supportive community. The crowd support has really helped the project to maintain upward price momentum and outperform other big cryptocurrencies in the recent bull run. Cardano Foundation also published an infographic some months back to suggest why greener ADA was more suitable for being part of the corporate balance sheet of Tesla. Will we see another price rally of ADA along with the major protocol update? Presently, the cryptocurrency is trading below the 50-day moving average and 99-day moving average. If the price doesn’t become stable above 1.4 USD, a renewed and sustainable rally can be really difficult.

ADA, already up 825% year-on-year, has formed a classic bearish ‘head and shoulders’ pattern. A ‘head and shoulders’ pattern is a popular signal to depict a bullish-to-bearish trend reversal and ADA has formed an inverse head and shoulders at present. The pattern clearly suggests that ADA can have big downside risks. It is important to note that the cryptocurrency market is often unpredictable and when Bitcoin is gaining a new vigour, altcoins can deny the outcome of any technical analysis. 

The high amount of staked ADA has really helped it to avoid market dumping but the investors are eagerly waiting for remarkable developments. If the expectation isn’t met, the price may plunge. ADA has grown in recent times due to the news of smart-contract capability launch but the effect may fade soon. Post-launch of the smart contracts, the blockchain will need innovative DAPPs to bring more users. Only environment friendliness can’t be the parameter to hold an investment for a long time. The competitors like Binance Smart Chain, Solana, Avalanche etc. are already having the smart-contract capability and a growing DAPP ecosystem. The road is going to be tough for Cardano. Everything depends on how the ADA price moves in the next few days. Only a stretch of daily closing candles above 1.4 USD can bring back the bullish momentum for ADA.

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