After surging above $3.00, the ADA price has taken a step back. But Cardano (ADA/USD) bulls are growing in confidence and dreaming big. The run-up to the Alonzo hard fork could not have come at a better time for the Cardano price. The cryptocurrency market as a whole has enjoyed a remarkable return to form over the last month. This, along with the highly-anticipated network upgrade, has created the perfect storm for the ADA price, sending it to a new all-time high this week.
The Alonzo upgrade is stage three of the Cardano network’s 6-step development roadmap. Upon completion, Cardano will enter the ‘Goguen’ era by introducing smart contracts and decentralized application (dApp) capabilities. This has encouraged Cardano’s staunch supporter base, who view it as a credible threat to Ethereum.
As a result, Cardano has outperformed many of the-rated cryptos. In the last month, the ADA price jumped almost 200% and in spite of the recent pullback is still 170% higher than it was on July 20th. The price appreciation has lifted its market cap to almost $90 billion, leap-frogging Binance Coin (BNB/USD) to become the third-largest cryptocurrency.
But as impressive as this is, it doesn’t guarantee the price has a one-way ticket higher. For starters, the upgrade is not exactly breaking news and is yet to happen. Although recent tweets from Cardano founder Charles Hoskinson point to Alonzo’s progress being on track which has enamoured buyers. Although, even with the introduction of smart-contracts, cardano faces stiff competition in the race for market share.
As I pointed out previously, over the last year, blow-off top highs have resulted in material corrections. The daily chart shows this January, March, and of course May. Obviously the ADA price recovered and went to set a new record in each of those times. However, the corections which ranged in scale from 38% to 64% would have been enough to wipe out some longs.
Another concern is the adage ‘buy the rumour, sell the fact’. With many jumping in ahead of Alonzo, The ADA price may find itself missing a bullish catalyst after the upgrade. And should the buying intensify as Alonzo gets closer, it will leave Cardano even more vulnerable.
However, for the moment, the coin has an abundance of willing buyers and I expect any dip in price to run into support. If Cardano struggles to clear $3.00 in the next day or so, it may well fall back to the former all-time high at $251.50. This should provide a strong level of technical support. Although if the ADA price slips below $2.5150 it could over-extend lower to the $1.8800 area. This would represent a 40% correction from Monday’s ATH, in line with the corrections in January and March.
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