Sell the news? Cardano price risks 20% drop despite Vasil hard fork euphoria

Sell the news? Cardano price risks 20% drop despite Vasil hard fork euphoria

Cardano (ADA) fell on July 21 of this year as the market tends to increase selling pressure near the most reliable resistance level in 2022 rather than the upcoming major hard fork.

ADA price could plummet by 20% in early August

The price of ADA fell 5% to $0.476 intraday. The downside move is part of a broader retracement that began after it briefly climbed above the 50-day exponential moving average (50-day EMA; red wave in the chart below) near $0.50.

The 50-day EMA has been a curved resistance level for ADA since October 2021.

ADA/USD daily price chart. Source: TradingView

Additionally, the upper trendline resistance of the broader descending channel pattern reinforces the selling sentiment around the ADA 50-day EMA wave. In early June, the same resistance confluence led to a 35% drop in price towards the channel’s lower trendline.


Therefore, ADA’s new corrective move has the potential to push the price towards $0.384 in July or early August, a drop of around 20% from its July 21 price.

2018 Fractal Suggests $0.20 per ADA

However, another analysis sees ADA falling above $0.384.

The bearish ADA forecast written by TradingShot compares the current correction to the correction during the 2018 market crash, as shown below.

ADA/USD daily price chart for 2022 and 2018. Source: TradingView

In detail, the 2018 chart above shows ADA experiencing multiple bearish rejections near its 50-day EMA (orange wave) while trending down in a descending channel pattern. The coin has exhausted its downtrend after correcting nearly 93% from its local highs.

“We also appear to be in the third (3) and final clause under the crash under the 1D RSI terms,” TradingShot wrote, adding:

“Therefore, if ADA holders want to avoid this, they need to see the price break above the 1D MA50 and trade above it for at least a week. Otherwise, a complete -93% decline from the top around 0.200 is possible. “

When is the hard fork?

The latest ADA price correction came a few days before the Cardano hard fork.

The hard fork, dubbed “Vasil,” was supposed to go live in June, but was delayed until the last week of July due to several prominent bugs. Still, as of July 21, Input Output Hong Kong (IOHK), the company behind the development of the Cardano blockchain, has not announced an exact launch date.

Vasil is expected to bring significant performance and capability upgrades to the Cardano blockchain, including faster block creation and higher transaction speeds. From a fundamental point of view, upgrades can boost ADA adoption due to increased network efficiency.

But Cardano has a history of large price corrections following most network upgrades, suggesting the prevailing “sell the news” sentiment in the market.

ADA/USD three-day price chart. Source: TradingView

For example, the Alonzo upgrade portion of the blockchain in September 2021 prompted ADA to rise more than 200% to an all-time high of $3.16 ahead of launch. But after the upgrade, the Cardano token fell by more than 85%.

ADA is only up 25% after a local bottom at $0.384 on May 10, suggesting that Vasil’s impact on the market is limited.

But not everyone is convinced. Analyst Lark Davis, for example, believes that the coin will “rip apart” after the hard fork as it manages to hold the 50-day EMA as support.

Until then, ADA is likely to continue to be under pressure from the “sell-off news,” further pressured by ongoing macro risks and their negative impact on crypto markets.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Every investment and trading move involves risk and you should do your own research when making a decision.


Be the first to comment

Leave a Reply

Your email address will not be published.