- Upcoming smart contracts might strengthen Cardano’s position as an Ethereum rival.
- ADA’s value continues to consolidate amid the FUD.
- Technicals promise green candles ahead.
Yerevan (CoinChapter.com) – Cardano (ADA) public blockchain platform lost the bullish momentum it adopted throughout the past six weeks and has been consolidating since August 24. The ADA/USD exchange rate stood at 2.81 in the Asian-Pacific session Tuesday. Will the digital asset extend the bearish bias or recover in the wake of the smart contract rollout?
Cardano primed as an Ethereum rival?
According to the company’s roadmap, Cardano will launch smart contracts on the mainnet on September 12. The extended functionality promises to position the blockchain as one of Ethereum’s prime competitors, alongside Solana, Polkadot, and other layer-1 solutions.
IOHK (Input Output Hong Kong; the blockchain infrastructure company behind Cardano) announced the specifics of the upcoming smart contracts on Monday. The company pointed out that, unlike Ethereum, Cardano adopted a different mechanism of fee determination.
“Cardano ledger design focuses on high assurance, security, and proven formal verification. In alignment with this strategy, it is also important to ensure that transaction processing is deterministic, meaning that a user can predict its impact and outcome before the actual execution”.asserted IOHK.
According to the announcement, Cardano smart contracts, dubbed Plutus, will not compromise the “deterministic ledger” property. In detail, the extended unspent transaction output (EUTXO) model will determine the transaction fee beforehand.
Despite the promising functionality, however, ADA continued to consolidate for the past two weeks. Charles Hoskinson, the founder and CEO of Cardano, commented on the bearish price action, calling it a “FUD storm.” The Fear, Uncertainty, and Doubt around the digital asset form naturally, as it stopped offering short-term rewards.
Mr. Hoskinson is certain, that the consolidation is a basis for a new leg up after the smart contract deployment. Technical indicators on the ADA daily chart suggest he might be right.
New leg up for ADA?
ADA managed to hit the #3 spot in the top 5 cryptos, with a current market cap of $90 billion. The recent consolidation period shaved off $6 billion off in a few days. But some technical indicators, along with the much-anticipated Plutus deployment, suggest an upcoming bullish trend.
The digital asset’s recent price action formed a pattern called the ascending triangle. First, the price action swing highs align with a significant resistance level at $2.95 (the flat side of the triangle). Next, the swing lows connect to form an ascending trendline.
As a continuation pattern, the ascending triangle keeps up the overall bias before the pattern had formed. The price action was bullish before the formation, so the continuation is likely to follow in the same direction.
ADA has already shot through the mentioned resistance level of $2.95 on September 2. It scored an all-time high of $3.09. However, the downtrend wiped the bullish attempt. If the digital asset manages a confident breakout, it could use the resistance as support and continue the uptrend.
Technical indicators do suggest a bullish trend in the upcoming sessions. However, Cardano’s future bias depends on the successful deployment of the smart contract functionality.