Cardano (ADA) was trading within striking distance of its three-week high earlier this week, leading some investors to suggest a trend change was needed. Actually, the bullish momentum is mostly related to an anticipation of the upcoming decentralized exchange (DEX) called SundaeSwap.
ADA price surged nearly 12% on Jan. 17 to hit an intraday high of $1.60, a day after SundaeSwap announced the launch of its “fully functional beta decentralized exchange (DEX).” However, the swing to the upside also came as part of a broader rebound trend in which ADA surged nearly 50% in just seven days.
In detail, the ADA rally started almost in sync with similar pullbacks in the cryptocurrency market. That included Bitcoin (BTC), which dramatically reversed its trend on January 10 after its price fell to $39,650. At press time, the price of BTC is trading at $41,500.
ADA initially followed the cryptocurrency market reversal, but then continued its bullish momentum on its own after taking note of the euphoria surrounding the launch of the SundaeSwap DEX on Jan. 20. As a result, ADA emerged as one of the best in the top ten. cryptocurrencies based on an adjusted 24-hour time frame.
What makes SundaeSwap bullish for ADA?
SundaeSwap’s official DEX launch announcement included evidence of increased demand for ADA tokens in the future and this is usually a bullish sign for investors.
The moment we’ve all been waiting for has finally come!
We’re excited and proud to share that SundaeSwap and the ISO will be launching on the evening of Thursday, January 20th (EST)!
Check out the article below! https://t.co/8oDYU6i3k9 pic.twitter.com/upgNZx2xH2
— SundaeSwap Labs (@SundaeSwap) January 15, 2022
The DEX platform also introduced its native SUNDAE token and discussed three ways to distribute it to users: through an initial share offering (ISO) round, yield farming, and direct exchange-based conversion.
Speaking of the ISO round, SundaeSwap explained that it would distribute 5% of the total SUNDAE supply across five epochs. Each epoch represents a five-day reward cycle in which users delegate their ADA tokens to a staking pool.
“If you want to ensure you qualify for all five rounds of ISO rewards, you must have ADA staked with eligible SPOs [Stake Pool Operators] before 21:45 UTC on January 25,” the DEX announcement reads, adding:
“Your reward will be calculated based on the snapshot taken at that time, and at the same time, at each subsequent epoch limit.”
Meanwhile, the yield farming program saw SundaeSwap add four ADA-based liquidity pools: SUNDAE/ADA, LQ/ADA, WMT/ADA, and CARDS/ADA. The DEX also allocated 500,000 SUNDAE per day from January to June.
ADA at $2?
The SundaeSwap-led bounce pushed ADA back towards its 100-day exponential moving average (100-day EMA – the blue wave) near $1.57.
Additional bullish signs have also emerged from the anticipated launch of Pavio, Cardano’s first metaverse venture.
Pavio is a virtual land startup similar to Decentraland with some 100,000 parcels of land, each of which is minted as a unique non-fungible token (NFT) with coordinates. The advent of the Metaverse in the cryptocurrency sector in recent months and Cardano’s involvement in it may further fuel the demand for ADA.
This increases the possibility of Cardano closing above its 100-day EMA resistance wave, thus shifting the next upside target towards the 200-day EMA near $2.
Conversely, the risks of a general crypto market decline led by the US Federal Reserve’s tapering programs this year could ruin ADA’s bullish setup to some extent.
“While ADA is far from its peak, the prospect of getting more scalability as part of its 2022 roadmap explains why investors seem to be betting big on Cardano. This point was also noted by Liam Bussel, CMO of Cardano’s native DEX WingRiders in a statement to Cointelegraph.
Bushel said,
“In a world characterized by novel and high-yield use cases, Cardano will be able to keep up and lead the pack. As a result, a weekly close above $1.80 is likely, barring sellers profiting at the last minute” .
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