The crypto ecosystem has finished an interesting first quarter, with Bitcoin leading the way ‘forward’ for the rest of the altcoins. The ADA cryptocurrency, from the Cardano project, has shown an interesting benefit for its holders during this period, something that is valued very positively taking into account that we are not yet in altcoin season for many cryptocurrency trade analysts.
In this sense, we consulted Martín Ungar about the performance of ADA during these first months of the year. Ungar, who is an important member of the Cardano community thanks to his Latin Stake Pools project that provides education on blockchain and focused on Charles Hoskinson’s project, is a great reference to project an accurate analysis on the performance of ADA and what is yet to come for this second quarter of 2023.
ADA/USD:BINANCE
Cardano ADA benefited from the Bitcoin rally as did most of the cryptocurrency market. Although, as is often the case during this stage of the market, bitcoin achieved higher percentage gains and for that reason it is said that we are in Bitcoin season.
Cardano ADA had a near perfect bounce off the 0.5 Fibonacci level at $0.23 on Dec 30, 2022. Since then it has been struggling with its 200-day and 21-week moving averages for the past three months.
These moving averages were able to initially break above in February but were then rejected by a high resistance area that is comprised of the 0.382 Fibonacci level at $0.43 and a long-term trend line rising but now below, then to have broken support definitively on November 8, 2022.
If BTC can overcome its resistance zone and reach USD 30k to USD 32k, ADA may have the necessary fuel to reach the critical zone formed between the USD 0.43 and USD 0.46 levels.
However, since we are talking about a longer-term uptrend, the upper range of this resistance will continue to increase over time.
Cardano ADA’s daily RSI tells a story similar to that of bitcoin, with the difference that it is setting new local highs. At the time of writing this review it is at 64 points with plenty of room to grow. The January 14 high of 80 points resembles that of bitcoin and followed the same structure of a bearish divergence with price.
ADA/BTC:BINANCE
Another chart that is important to monitor is the ADA/BTC chart. In this case we are evaluating Cardano ADA in relation to bitcoin and not in dollars. This helps us analyze whether owning an alternative currency to Bitcoin makes sense (financially speaking) or not.
As we can see in this monthly chart, Martín has drawn a very long-term symmetrical triangle. For example, owning ADA from September 2019 to September 2021 was more profitable than owning BTC.
However, from September 2021 to date it was more profitable to have BTC, this is because Cardano is a project with a lower market capitalization and therefore more sensitive to market volatility.
After breaking the support of the 0.382 Fibonacci level at 2183 satoshis per ADA and the 200-day and 21-week moving averages towards the end of September 2022, ADA/BTC has found itself in a downtrend. Most recently at the end of February it broke another Fibonacci 0.5 support at 1576 satoshis per ADA, although in the last two weeks it has been experiencing a bounce.
As Martin mentioned earlier, we are now in Bitcoin season. This is the period of time after Bitcoin hits its bottom, where it starts to gain ground rapidly and the rest of the market is slow to react. Therefore, BTC and ADA may continue to value but the trend and history indicates that at the moment BTC will have a higher percentage valuation, leading to the fall of ADA/BTC.
The ADA/BTC floor can be found between 1138 and 715 satoshis per ADA, both are Fibonacci levels, 0.618 and 0.786 respectively. The long-term uptrend will also play a role in determining the bottom of this cycle.
The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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