Crypto News

Cardano (ADA) Is Forming the Signal That Preceded a 75% Crash: Analyst

ethereum

Despite Bitcoin’s stagnation, Cardano (ADA) has performed extremely well over recent weeks.
Data from crypto research firm Messari shows that the leading altcoin is up 150% since the start of the year. This is a much better performance than almost all top-50 cryptocurrencies, save for a few outliers in the DeFi space.
Cardano vs. other smart contract cryptocurrencies since the start of 2020. Chart from Messari
A full-time trader, however, thinks that ADA’s outperformance won’t last for long. He shared a chart indicating that the cryptocurrency has formed the same bearish signal last seen at Cardano’s 2019 peak.
Cardano’s Bullish Trend May Not Last For Long: Trader
A trader shared the image below on July 1st, noting that Cardano’s performance charted against Bitcoin is forming a bearish divergence. The analyst’s indicator is trending lower while prices trends higher, suggesting underlying weakness:
“The reason I’m building the ADA short here. If we invalidate the divergence I’m happy to step out the way. Until then I’ll continue to slowly build this position until the div confirms, at that point I can ramp up,” he commented on the chart.
The divergence that has formed is especially pertinent as it formed prior to ADA falling ~75% against Bitcoin from Q2 2019 to Q4 2019.
Cardano (ADA) analysis by full-time trader Cold Blooded Shiller (@ColdBloodShill on Twitter). Chart from TradingView.com
Buy the Rumor, Sell the News?
ADA’s extreme outperformance over recent weeks has largely been tied to the asset’s underlying fundamentals.
As of the time of this article’s writing, the underlying Cardano blockchain is going through what is known as its “Shelly” upgrade.
Shelly is a phase of the blockchain’s development that will increase its performance while optimizing for decentralization. This will be done through a Proof of Stake system. As the Cardano Foundation explains:
“Shelley will also see the introduction of a delegation and incentives scheme, a reward system to drive stake pools and community adoption… Come the end of the Shelley era, we expect Cardano to be 50-100 times more decentralized than other large blockchain networks.”
With ADA rallying off that implementation, the cryptocurrency could see a “sell the news” drop afterward. This is similar to what happened with Bakkt and Bitcoin in 2019 and the CME/CBOE futures rally in 2017.
Cardano’s Fate is Tied to Bitcoin
In some senses, the fate of ADA’s price trajectory is tied to that of Bitcoin. After all, Coin Metrics data shows that the two cryptocurrencies have a positive 180-day correlation of 0.84.
Fortunately for Cardano bulls, analysts are once again becoming optimistic about BTC.
As reported by Bitcoinist, Glassnode CTO Rafael Schultze Kraft observed that Bitcoin’s on-chain trends are stronger than they have been in months. He observed that the number of hourly new BTC addresses reached a two-year high while the hourly count of transactions reached a 10-month high.
There’s also the simple fact that more than 62% of all BTC hasn’t moved in a year. 
“Bitcoin 1yr HODL new ATH!! We have reached a new all-time high, with 62% of bitcoin not moving on-chain for at least 1 year. Strong hands from hodl’ers! Such high levels of HODL’ing have been present at the start of previous Bitcoin bull runs,” on-chain analyst Philip Swift recently wrote in regards to the image below.
Bitcoin 1 year+ HODL Wave indicator from on-chain analyst Philip Swift (@PositiveCrypto on Twitter)
Featured Image from Shutterstock
Price tags: adausd, adabtc
Charts from TradingView.com
Cardano (ADA) Is Forming the Signal That Preceded a 75% Bear Market: Analyst

How useful was this post?

Click on a star to rate it!

As you found this post useful...

Follow us on social media!

Write a Comment

Related Crypto News

Monero’s Hashrate Experienced Its Largest Single Day Gains Ever
Monero has experienced its biggest single day gain in hashrate since its creation back in 2014. August 6, Monero...
Bitcoin Plunges Under Pivotal $11.5k Support: What Do Analysts Think Is Next?
Bitcoin is slipping lower after peaking at $11,950 just the other day. This marked the second major rejection at...
Price Analysis 8/7: BTC, ETH, XRP, BCH, BSV, LTC, ADA, LINK, BNB, CRO
Bitcoin and altcoins might consolidate or correct marginally for a few days before a possible breakout to the upside....
California’s Attorney General Warns People to Be Wary of Crypto Scams
California authorities recently came out with a fresh cautionary statement on crypto crime. Xavier Becerra, California’s attorney general, recently...
California’s Attorney General Warns People to Be Wary of Crypto Scams
California authorities recently came out with a fresh cautionary statement on crypto crime. Xavier Becerra, California’s attorney general, recently...
German Authorities Confiscate $30 Million in Bitcoin From Pirate Movie Site
German authorities, with the help of the U.S. Federal Bureau of Investigation (FBI), have confiscated about $30 million in...

Featured Crypto News

BTC Averages Over 1 Million Active Addresses as ETH Transaction Fees Hit $2M Daily
Bitcoin averaged over a million daily active addresses in the past week for the first time since January 2018....
Two Macro Calls That Could Propel Bitcoin to $14,000 This Year
Bitcoin may hit $14,000 in the coming quarter. The analogy appears out of two extremely bullish calls made for...
Investors Dollar-Cost Averaging Bitcoin Since 2017 Made a 61.8% Return
Data shows investors who dollar-cost averaged into Bitcoin even since the $20,000 peak are profitable. Researchers at Coin Metrics...
Grayscale Investments’ Ethereum Trust Filed With the SEC to Obtain Reporting Status
The digital currency asset manager Grayscale told investors on Thursday that the firm has publicly filed a Registration Statement...
This Bitcoin Metric Just Dropped 4%—And It’s Bullish For The Market
Bitcoin has rallied by approximately 25% over the past two weeks as Ethereum has wrested the market higher. The...
Bitcoin Price Climbs to $11,200, But Three Factors Hint at a Pullback
The price of Bitcoin spikes to $11,200 but three key factors suggest that a short-term pullback is likely as...