Cardano (ADA) price drops 7% following Bitcoin’s lead – what to expect?

Cardano (ADA) price drops 7% following Bitcoin's lead - what to expect?

YEREVAN (CoinChapter.com) – Cardano (ADA) has enjoyed a successful start to 2023 and jumped 45% year-to-date, with two setbacks along the way. The latest such correction came on Jan 23, after Bitcoin’s similar move. As a result, the token price dropped 7% in value since, and stood at $0.35 on Jan 25. Meanwhile, technicals suggest the correction could continue.

ADA in a descending channel.

As mentioned, ADA traded within a technical setup called the ‘descending channel’ since the FTX debacle in May 2022. The formation entails two parallel trendlines with a negative slope. They enclose the price action connecting the swing highs and lows, incrementally lowering the asset price.

Cardano (ADA) in a descending channel.
Cardano (ADA) in a descending channel. source: tradingview.com

Notably, the descending channel does not forecast a bias after the ADA coin leaves the setup. However, the channel can be instrumental in determining short-term bias as long as it remains relevant. Considering the latest resistance retest on Jan 23, the channel persists. Thus, the target price for the Cardano token could stand at $0.2, the setup’s lower trendline.

Also read: 20% jump incoming for Fantom (FTM) on the back of a technical setup and new partnership.

What’s in store for the ADA coin?

However, before the ADA price can reach the aforementioned target, it has several supports along the way. For example, the closest assistance line lies at the current price of $0.35.

If ADA holds the said support, it will head for the channel’s resistance in the upcoming session. If not, the next possible support stands at $0.32, marked on the chart above. Judging by the lowering trading volumes throughout the previous days, a drop to $0.32 might be in the books.

However, a long-term bullish drift comes from developers, as they increase the activity on the Network. Crypto analytical platform Santiment noted the tendency, as Cardano developers took the third place in Github commits in the previous 30 days.

What's in store for the ADA coin?

Cardano Community Digest news

Meanwhile, Cardano published its weekly community digest on Jan 23, discussing the latest news and setbacks.

According to the letter, Input Output Global (IOG), the company developing Cardano, has launched a toolkit for sidechain development in the Network. The latter is unsurprisingly called the “sidechain toolkit” and reportedly “makes it easier to create and deploy” sidechains.

[The toolkit] allows them to test and deploy new applications and use cases. This move is expected to increase the functionality and versatility of the Cardano network, as well as attract more developers to build on the platform.

read the digest.

“Transient anomalies” on the Network

Additionally, IOG advertised that the toolkit is designed to be user-friendly and easy to use, “making it accessible to developers of all skill levels.” It also includes a set of pre-built templates that can be customized to suit the needs of the developer, as well as a set of tools for deploying and managing the sidechain.

On the more troubling news, Cardano Network was subject to a “transient anomaly” on Jan 21-22.

On the evening between January 21 & January 22 (between block 8300569 and 8300570), the Cardano network experienced a minor incident that temporarily affected a portion of the nodes causing them to disconnect and restart…

reported the digest.

However, the Network assured the followers that the developers considered such “transient anomalies” in the design of the Cardano-node and Ouroboros consensus mechanism. Thus, the network “behaved exactly as expected in this situation,” minimizing the damage.

Also read: Bitcoin price over $22K – bull market cycle or dead cat bounce?

While the letter above is not likely to exert any real influence on the ADA price, Bitcoin’s identical chart might be the real reason. The Cardano token, as well as other leading altcoins, have been charting in a BTC-copycat manner year-to-date.

Thus, if the alpha crypto loses bullish momentum, the rest of the pack will likely follow. And, vice versa, should BTC bulls push for more gains, ADA might break the descending channel, printing more green candles.

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ADA coin, Cardano (ADA) price drops 7% following Bitcoin’s lead – what to expect?

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