Where is Cardano heading now that the Alonzo hardfork is on its way?

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Cardano is now just hours away from the much-anticipated Alonzo hard fork. According to previous announcements, the hard fork will take place on September 12th, Sunday, at roughly 21:45 UTC.

A few weeks ago, such an update would have played straight into ADA’s hands as it approached another important milestone on the charts, but there has been a time of collective adjustment in the industry since the beginning of September.

Now, market speculation is expecting ADA to embark on another bullish leg after the Alonzo hardfork but it might not be as straightforward as it seems.

Typical Supply Zone Recovery?

Now, over the past day, Cardano did experience a massive recovery of 12-13%, which allowed the asset to momentarily reach $2.80. However, the spike can be explained in terms of supply zone dynamics.

As illustrated in the chart above, the price zone between $2.92-$2.80 was extremely vital for the asset before the eventual collapse. After dropping down to $2, the current recovery up to exactly $2.80 can be considered normal according to market structure, as buyers are able to exist at a possible break-even or lower loss position.

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Another interesting metric was provided by Santiment from a perspective of FOMO sentiment.

Source: Twitter

According to data, the rally back towards $2.80 was triggered by momentary FOMO from the market, and historically, such rallies have always led back to a position of lower lows in the charts. Right now, the asset was valued at near $2.60, which can be inferred as bullish momentum currently fading off in the market. Trading volumes have also kept low during the last few hours.

Why the Alonzo hardfork will be a non-event for Cardano?

Charles Hoskinson’s joy is evident right now, and for good reason. The Alonzo hardfork is one of the most significant updates to the ADA network, bringing smart contract capability ahead. However, the essential beneficial impacts will most likely occur over time, and it is quite improbable that the price would return to prior high levels as a result of the update.

Source: Messari

The average transfer value also reflects the current paucity of activity. As previously stated, the transfer value collapsed during the decline, maybe as a result of whales moving their winnings; but, throughout the subsequent surge, the average transfer value continued to fall. This could indicate a couple of things: first, there may be a dearth of sellers at the moment, which is a bullish indicator, but it could also indicate that outflows are decreasing.

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Cardano’s market momentum is shaky right now, but investors should not put all their eggs in one basket over the weekend, as the price is unlikely to respond to the hardfork.

 

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