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Cardano (ADA) was one of the few cryptocurrencies that did not experience significant price drops in early June. Despite the massive drop in Bitcoin’s price, ADA firmly held the $1.45 and $1.3 support levels, preferring to move sideways on the charts. Unfortunately, the fifth-ranked alt couldn’t hold its own when Bitcoin’s price fell below $30k, with ADA losing 25% of its value between July 7 and July 20.
The larger crypto-market generally follows Bitcoin, but there have been exceptions in the past, one of which was Cardano. ADA, on the other hand, appears to be mirroring Bitcoin’s price this time. Cardano, in fact, retested the $1 long-term buying range for the sixth time this year.
While Cardano experienced a quick recovery at one point, increasing by 13 percent in just two days, the alt’s drop to $1 levels indicated that there may be more room for a decline. In retrospect, it’s also worth noting that ADA was trading near $0.80 in the middle of February. A closer look at the alt’s one-day chart, on the other hand, revealed its recovery from the oversold zone on July 21.
Another close above the 200-day SMA would indicate that ADA is on the mend.
It’s worth noting here that, prior to the Cardano hard forks, ADA’s price experienced some notable rallies this year. But, will that still be the case before the Alonzo hard fork is completed in August? Analyst Dan Gambardello recently outlined Cardano’s recovery strategy, stating that the ultimate short-term goal for Cardano is “to get back above that $1.37 area on a weekly chart and close green above the 20-week moving average.”
On Cardano’s daily chart, he also pointed out the intersection of a falling wedge and a descending triangle pattern. He said, charting the breakout target around the $2 range,
“If Cardano is to break away, the breakout target for the descending triangle will be closer to the $2.30 range but either way it’s two bullish targets to the upside falling wedge and the descending triangle. We’ve been tracking upper trend line right around $1.26, Cardano could be testing this upper trend line very soon.”
Furthermore, emphasising the rallies in ADA’s price before each hard fork, the analyst stated that it is unavoidable this time as well. The green areas in the chart below represent ADA price rallies prior to the Mary and Shelley hard forks. As a result, another rally in the next two months fueled by the Alonzo hard fork would not be surprising.
So, does that mean Cardano is prepping for a rally?
While it may appear that Cardano is in for some solid gains in the mid-short term, some metrics present a different picture. On the development front, for example, activity remains low when compared to June levels. Furthermore, ADA has shown a downward trend in development activity, with lower highs.
Furthermore, trade volumes and the percentage of total stablecoin supply held by whales with more than 5 million USD remained low. Regardless of the price increase that accompanies BTC’s own increase, the total supply percent of stablecoin has seen a downward trend. Similarly, weighted social sentiment on Twitter experienced some unexpected peaks and dips in just one day.
In fact, at the time of writing, the indicator was nearing the end of a significant decline.
After all is said and done, some good rallies can be seen in Cardano’s mid to short-term price action if the alt breaks away from its key resistance levels, converting them to support.