Cardano (ADA) was one of the top performing cryptocurrencies on June 6 as traders weighed in on a key upgrade that promises to improve the smart contract capabilities of its blockchain.
The FOMO (fear of missing out on potential profits) of the Vasil Hard Fork
Dubbed “Vasil”, the so-called hard fork event will tentatively take place on June 29, 2022. As a result of the euphoria surrounding this update, traders have begun to speculate more on the bullish outlook for ADA, which has given as a result better performance than other top-tier digital assets.
For example, the price of ADA rose more than 14% to $0.64 on June 6, compared to 6% gains by its main rival, Ether (ETH), on the same day.
Thanks to the excitement surrounding its upcoming Vasil Hard Fork, #ADA surged over 20% to become one of the best-performing cryptos last week.
Prices as of now:#ADA – $0.637400#LINK – $7.98#XLM – $0.149126#UNI – $5.34
Buy/sell crypto futureshttps://t.co/QgaS0WtKde pic.twitter.com/1DWDxwFJ3Z
— BTCC (@YourBTCC) June 6, 2022
Thanks to the excitement surrounding its upcoming Vasil hard fork, ADA surged more than 20% to become one of the best-performing cryptocurrencies last week.
Prices as of now: ADA – $0.637400 LINK – $7.98 XLM – $0.149126 UNI – $5.34
Buy/sell cryptocurrency futures
Cardano’s price history also shows similar euphoric behavior among traders in the days leading up to the hard fork events. For example, the “Alonzo” update in September 2021, which introduced smart contract functionalities to the Cardano network, preceded an ADA price hike of over 200%, as shown below.
Similarly, the Cardano “Mary” hard fork in March 2021 preceded the ADA price boom of over 1,600%.
ADA bull traps
The previous price rallies that led to the hard fork events also occurred amid an expansionary macro environment. At that moment, interest rates were close to zero, and the Federal Reserve was buying $120 billion in government bonds each month.
Nevertheless, Currently, the US central bank has become more aggressive after seeing a persistent rise in inflation. Therefore, many analysts argue that there is now less liquidity in US dollars to buy riskier assets, including stocks and cryptocurrencies.
Cardano has reeled under the pressure of the Fed tightening, with ADA trading almost 80% below its September 2021 high of $3.16. The broader move lower also includes significant bounces, as shown in the chart below.
ADA price at $1?
From the technical perspective, ADA is now testing a confluence of resistance comprising a downtrend line and its 50-day EMA (the 50-day EMA; the red wave) near $0.66 and a horizontal trendline (the neckline) near $0.66. $0.62 which makes up what appears to be a “double bottom” pattern.
A break above the resistance confluence could trigger the breakout of the double bottom.
As a rule of technical analysis, traders measure the double bottom breakout target by adding the distance between the lower levels and the neckline to the breakout point. This gives us a June target of $0.87, 40% higher than the current price and likely before Vasil’s update.
If a rally does occur, ADA could test its 200-day EMA (200-day EMA; the blue wave) near $1 for a breakout or pullback. However, a pullback seems more likely, given the prevailing macroeconomic risks.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investments and operations involve risk, so you should do your own research when making a decision.
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