Key Cardano outlook
- Cardano has surged marginally despite supportive fundamentals.
- Macroeconomic factors have contributed to its token ADA’s downside behavior.
- Meanwhile, a confluence of technical support levels are keeping the bullish hopes alive for Cardano.
YEREVAN (CoinChapter.com) — Lackluster volumes continued to play spoiler in Cardano markets despite the blockchain project’s major adoption breakthroughs.
Its native token ADA surged by a modest 0.28% to $1.26 on Wednesday as traders assessed a flurry of optimistic fundamental drivers. First, crypto exchange OKEx announced that it would list ADA-enabled trading pairs on its platform. Second, Save the Children—a Rwanda-based nonprofit—activated ADA donations on its platform following a partnership with Cardano.
And last, Federal Reserve Chairman Jerome Powell admitted that inflation might run hot in the US in the coming months.
Exchange listings typically excite traders into buying tokens that gain entry into prestigious trading platforms. Part of the reason is legitimacy. In addition, getting added to an exchange makes a token more liquid in the eyes of traders. That is why it appears strange that ADA almost slept walk through the OKEx listing announcement.
As a bonus, Cardano’s parent organization IOHK also announced that it had successfully upgraded its Alonzo testnet into Alonzo White. In simple terms, the so-called “hard fork” is a step towards introducing smart contract functionality to the Cardano ecosystem.
But even that didn’t budge ADA bulls, hinting that they preferred to keep a distance from crypto markets in general over a mixed macroeconomic outlook.
The day’s biggest news came from Capitol Hill, where Powell shed more light on how the Fed would likely respond to the recent ticks in consumer prices. The chairman said the central bank is ready to intervene if inflation goes out of control. But, at the same time, he also stressed that price increases might ease later in 2021.
“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Powell told the Congress during a hearing on Wednesday.
Crypto investors were waiting for Powell’s testimony to determine the market’s upcoming bias, especially after Bitcoin, the flagship cryptocurrency, crashed from $65,000 to $30,000 in less than a month and dragged the rest of the market down alongside.
Its sell-off resumed on Tuesday after the US consumer-price index rose to 5.4% in June compared to a year ago, reviving concerns that it would lead the Fed to withdraw its monetary support and thus make Bitcoin less attractive as a hedge against runaway inflation.
As usual, the rest of the cryptocurrency market, including Cardano, also fell in tandem, only to wipe a portion of those losses on Wednesday after Powell clarified that the Fed would keep its monetary policy in place until they achieve maximum employment for the US economy.
“While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue,” Powell said in prepared remarks before the hearing. “We will continue these discussions in coming meetings. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases.”
Bitcoin fell before Powell’s remarks and rose after that, almost negating its intraday losses. Ethereum did the same, and so did Cardano, one of the top-ten tokens by market cap.
Going technical on Cardano (ADA/USDT)
When fundamentals don’t work, technicals attempt to find answers.
Cardano’s most-traded pair ADA/USDT has bounced off a support confluence of a slightly-tilted ascending trendline and its 200-day simple moving average (200-day SMA; the orange wave), as shown in the chart below.
So far, the bounce could playoff in favor of bulls based on recent trends. That is: a pullback from the trendline-moving average support confluence could have traders enter a long entry towards the next resistance target in the line, the 50-day SMA (the blue wave), which is trading almost 25% higher, at around $1.46.