Key Takeaways:
- Cardano has broken above a bearish pattern but the uptrend might be a fakeout.
- Historically, ADA prices have remained impassive to network upgrades.
NEW DELHI (CoinChapter.com) — Cardano (ADA) prices have broken above a descending triangle setup, which might invalidate the bearish pattern. However, the altcoin recently staged a fakeout, and investors remain vigilant of ADA’s prospects.
A descending trendline connecting swing highs and a horizontal trendline joining swing lows form the pattern. The height of the triangle’s thickest section determines the price target in a descending triangle setup.
Once ADA exhausts the formation, the token risks a drop to $0.31, resulting in a loss of more than 36% from current levels. Moreover, the Cardano token previously broke above the descending trendline of the pattern in early Jun, before the uptrend failed.
Also Read: Cardano (ADA) At Make-or-Break Levels, Another 50% Drop On The Cards?
Additionally, ADA price’s recent run above the triangle’s upper trendline seems to be faltering, with prices falling more than 13% between Jul 20’s high ($0.55) and Jul 21’s low ($0.48) levels. Finally, Cardano’s declining volumes further emphasize traders’ uncertainty regarding ADA’s prospects.
Cardano Vasil Hard Fork Might Not Be Enough
ADA bulls might be pinning their hopes of an uptrend on Cardano’s upcoming Vasil hard fork. The upgrade aims to boost the network’s transaction throughput, volume, and liquidity.
In addition, the hard fork might help make Cardano more developer-friendly, resulting in more blockchain projects. However, historical trends indicate that ADA prices are often unresponsive to network upgrades.
After Shelly hardfork on Jul 29, 2020, ADA prices continued moving horizontally before dropping below $0.1 in early Sept. The altcoin began a bull run towards the end of the year. Next came the Mary hard fork on Mar 1, 2021, which introduced native token and multi-asset support on Cardano.
ADA’s price action following the Mary hard fork remained more or less linear as prices moved between $1.5 and $1 till May. The altcoin did start an uptrend in May, but ADA prices moved back inside the $1.5-$1 channel shortly afterward.
Also Read: Cardano (ADA) Signals Bullish Breakout and a Swift Rally Could Occur.
The Alonzo hard fork, which went live on the mainnet on Sept 13, 2021, introduced smart contracts support on the platform. FOMO surrounding the upgrade helped ADA prices chart a new ATH near $3.
But, profit booking began a downtrend that saw Cardano prices crash by over 50% to $1.3 by the end of 2021.
Based on Cardano’s price history, it seems unlikely that ADA would rally upwards after the Vasil upgrade, especially with the current bear run fuelled by macro and geo-political factors.
At the time of writing, ADA was trading at $0.49, up 0.4% on the day.
