ADA, the cryptocurrency that powers Cardano’s blockchain protocol, is coming under selling pressure on Friday in tandem with broader cryptocurrency markets. ADA/USD was last changing hands in the $0.37s, down around 1.5% on the day, with crypto weighed by downside in US stocks and upside in the US dollar and yields in the wake of a hotter-than-expected US inflation report.
The PCE Price Index report for January revealed a larger-than-expected jump in MoM core inflation to 0.6% from 0.4% in December. This data has triggered fears that the Fed might have to raise interest rates higher for longer, hence the risk-off reaction in crypto and traditional asset classes.
ADA is on the decline once again, dropping below its 200-day moving average and into the $0.38s. This puts the coin at a technical crossroads, with today’s close being key to its future.
ADA is currently testing an uptrend that has been in play since the end of 2022. If it breaks below this trend line and its 50DMA just under $0.37, then a drop back to a recent double bottom in the $0.35 area could happen. However, if the crypto bulls regain control and can push ADA to close Friday’s session back above the 200DMA, then a retest of recent highs in the $0.42 area could become more likely.
The Cardano ecosystem is growing rapidly, with a passionate community of developers and supporters who are constantly launching new protocols on the blockchain. The latest innovation is Djed, an overcollaterized algorithmic stablecoin. If cryptocurrency markets continue their gradual recovery, ADA can certainly appreciate in value.
The Fed is still expected to raise rates three more times in 2023, despite the economy remaining strong and inflation remaining elevated. If crypto investors want to see a resurgence in enthusiasm, they’re going to need to see a series of rate cuts from the Fed.
Cardano has seen an incredible surge in value recently, with prices reaching as high as $3.0. While this may seem unlikely given the current market conditions, bulls shouldn’t lose heart. Cardano is still a dominant blockchain player, and with broader crypto adoption on the rise, a rally to $3.0 is highly likely in the coming years and decades. However, bulls will need to be patient.