Yerevan (CoinChapter.com) – Cardano’s native token ADA could slide to approximately $0.70 as it flirts with a long-term support range.
Technical Support For ADA
ADA’s previous all-time high range was $1.02-1.34 (purple bar on the weekly chart below) — which acted as resistance on more than three occasions — but flipped later to become support. The level capped the Cardano token from pursuing aggressive downtrends as it traded near fresh highs.
Therefore, if ADA manages to stay above the said support range, it is likely to continue providing assistance and keeping the price from more breakdowns.
The 20-week exponential moving average(EMA-20: blue wave on the chart) has a pronounced bullish trend despite the recent turbulence and the May 19 crypto crash. The support offers an additional price floor and a coordinate for traders to watch. When the value of a token gets dangerously close to EMA-20, traders usually tend to go in and buy it to prevent a crash. The same happened with ADA for weeks, as seen on the chart below.
In the reverse case, losing the said support levels would open flood gates, as ADA could drop down to its 50-week simple moving average (SMA-50) as its last resort for assistance. Even if Cardano bounces off the SMA-50, it will still have lost 50 percent of its current value.
Technical indicators are not enough to determine the future trajectory of the token. The crypto market as a whole might be in trouble again, as Bitcoin (BTC) and Ethereum (ETH), two major players on the board, are counting their losses.
Bitcoin has lost 10 percent in the past 24 hours and traded at $32,794 in Tuesday’s European session. The new bearish wave was initiated by Donald Trump, the ex-president of the United States. He called the alpha crypto a “scam” in response to the attempts of the president of El Salvador Nayib Bukele to make it a legal tender.
Where Bitcoin goes, the majority of the crypto market follows, as BTC holds almost half ($615 billion) of the total crypto market cap ($1.4 trillion). Also, ADA/USD climbed by up to 14,216 percent from its mid-March 2020 nadir of $0.017 compared to Bitcoin that rallied more than 1,700 percent. That shows a higher likelihood for ADA to crash more than BTC.
Traders who hold ADA typically have assets in bigger cryptos as well. Therefore, if they suffer losses because of BTC and ETH declining, they will likely seek to amend those losses elsewhere, selling their ADA. Thus, Cardano would decline as a result.
After Mr. Trump’s remark, ETH, the second-largest crypto, declined by 11.7 percent. Cardano’s ADA, the 5th crypto with a market cap of $48.6 billion, complied and also dropped along with the bigger coins.
What’s Next for Cardano?
Cardano has made substantial developments in its blockchain on May 28. First, the company introduced a new smart contract rollout Alonzo, aiming to increase the functionality of the whole platform. Alonzo is the first step in a series of updates, earmarked for the next 3 months. After the noted period, Cardano will be able to launch smart contracts on its platform, boosting the whole ecosystem.
Will the developments be enough to keep the price of ADA from following the rest of the market? The upcoming sessions will show if the token can withstand another storm. If it manages to keep the support levels provided by the EMA-20 and the $1.31 price margin, Cardano could avoid losses. However, conversely, the price could drop as low as SMA-50 at 0.70 or lower.