Cardano (ADA) close to finishing Q1 at a 14% loss — what’s in store for Q2?

Key Takeaways:

  • Cardano (ADA) erased most of February losses, but closed the quarter with a 14% loss
  • The Network's roadmap pinpointed the Milkomeda launch as a start of the Basho era.
  • Q2 might solve Cardano's scalability issues but the price forecast could remain bearish

YEREVAN (CoinChapter.com) – ADA, the native token of the Cardano smart contract platform, traded close to $1.20 in Wednesday’s European session after three days of sideways consolidation. Moreover, the digital asset bottomed out on Mar. 13 and has been maintaining a bullish momentum for the following two weeks, erasing the February losses.

However, the Q1 statistics show a 14% decline since Jan. 1, 2022. As CoinChapter covered in the previous Cardano review, the digital asset consolidated along a crucial resistance line at $1.2 that could hinder ADA’s bullish claims.

Cardano (ADA) quarterly performance. Source: TradingView.com
Cardano (ADA) quarterly performance. Source: TradingView.com

Despite the price advance, the trading volumes have declined for a week, suggesting insufficient buying pressure from ADA bulls. Additionally, the Moving Average Convergence Divergence (MACD; green/red histogram) hinted at a looming downtrend.

Also read: ADA at crucial resistance as Milkomeda C1 launched on Cardano. 

The geopolitical climate, rising inflation, and swelling uncertainty don’t leave much room for solid predictions. Thus, the short-term bearish outlook does not constitute a quarterly forecast. Meanwhile, Cardano Roadmap signifies that the Protocol has arrived at a crucial phase in its development and will continue on the same path throughout Q2.

What does Q2 have in store for Cardano?

According to the Roadmap, Cardano completed its Goguen era of development, the main focus of which was to introduce smart contracts to the blockchain. After that, the Network proceeded to the Basho era, named after renowned Japanese poet Matsuo Bashō. The latter is a phase of “optimization, improving the scalability and interoperability of the network.”

Additionally, one of the core developments of Basho will be the introduction of sidechains. Those are new blockchains, interoperable with the main Cardano chain, that have the potential to extend the capabilities of the Protocol. Sidechains can also be used as a sharding mechanism by off-loading work from the main chain.

Also read: Bitcoin hits $47.5K, but its correlation with U.S. equities spells extreme selloff risks.

The feature will likely increase the capacity of Cardano without affecting the security of the main blockchain, says the Network.

Improving capacity to ensure that the blockchain’s number of users can grow dramatically is one of the main goals of this era. The expected users range from traditional DeFi users to people in developing countries. Of course, to accomplish all of this, Cardano needs some optimizations under the hood, and IOHK is going to incorporate both on-chain and off-chain solutions.

commented Cardano-based fundraising platform Kick.io

Basho era

Furthermore, the first Cardano sidechain Milkomeda C1 launched on Mar. 29, marking the beginning of Basho. Milkomeda hopes to solve the scalability issue that plagues most layer-1 platforms and ensure interoperability with multiple blockchains in the future.

Also read: BTC holds above $47.5K while Grayscale on the outs with SEC over Bitcoin spot ETF. 

As a result, Cardano Network will likely devote the second quarter to furthering the development of sidechains. Will ADA respond with an uptrend? The upcoming quarter’s price action could heavily depend on Bitcoin and the large-scale events in the fiat market. However, the short-term prognosis based on technical indicators remained bearish.

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