The long-awaited Vasil de Cardano (ADA) upgrade went live on September 22, promising to make its blockchain more scalable and cheaper than before. Nevertheless, this has failed to give the ADA market a bullish push.
News selling hinders Cardano
ADA price has fallen by approximately 9.5% since the update and was changing hands at $0.43 on September 26. The ADA/USD pair’s decline was accompanied by a rejection candlestick on its daily price chart, confirmed by a brief rally to $0.48 on the day of the fork and a strong correction afterwards.
The muted reaction of ADA bulls to the successful Vasil upgrade is similar to what happened in the Ether (ETH) market after the Ethereum merger.
In other words, a buy the rumour, sell the news event, resembling most previous Cardano hard forks that have a history of ADA price drops, as shown below.
Also, Macroeconomic risks, led by a very aggressive Federal Reserve, also weighed on ADA’s bullish expectations after the Vasil crisis.
The US central bank’s decision to hike its benchmark rates another 0.75% came 48 hours before the Cardano upgrade. ADA fell along with risk assets in response, given its consistent positive correlation with equities throughout 2022.
On September 26, the correlation coefficient between the Cardano token and the Nasdaq Composite was 0.83.
The price of the ADA contemplates a drop of 40%
Meanwhile, ADA technicals draw a descending triangle pattern for a short-term bearish outlook.
Theoretically, a descending triangle in a downtrend acts as a bearish continuation signal, meaning that it resolves after the price breaks below its supportive trendline decisively. By doing so, the price falls by as much as the maximum height of the triangle.
Therefore, a break below the ADA triangle support at $0.41 could send its price tumbling towards $0.25. In other words, a 40% price drop by the end of 2022.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.