Cardano reaches historic resistance, how will it continue?

ADA, the native cryptocurrency of the Cardano network, has seen a significant rally in its price over the past seven days, reaching historic resistance. The cryptocurrency has increased its price by 8%, going from $0.42 to $0.50, on May 21.

As seen in the following TradingView chart, the currency has found a ceiling when reaching that price. However, today its price has dropped to $0.47.

The increase obtained has allowed him to be in the top 10 cryptocurrencies with the highest market capitalizationreaching $17 billion, according to data from CoinMarketCap.

ADA’s bullish trend, while facing a hurdle at $0.50, has managed to surpass this level on several occasions so far this year. The last time was in February, when it experienced a 63% increasereaching $0.80.

If ADA manages to break that resistance zone, it could have a bullish run in the same way that happened last January, according to the previous image.

Looking at ADA’s Relative Strength Index (RSI), a metric that measures the momentum of price movements, it sits at 51, according to the TradingView chart below.

The RSI at 51 is considered a neutral zone, which indicates that the price of the cryptocurrency is neither overbought nor oversold. At this point, the market is in balance and there is no clear signal of a short-term bullish or bearish trend.

When the RSI is above 70 on a scale that goes from 0 to 100, it reflects that an asset could be overbought and heading into a price decline. On the other hand, if it is below 30, it reflects the opposite.

Another aspect to evaluate in Cardano are the metrics on-chain of the network. According to Messari data, there was a strong increase in active addresses that went from 21,639 on May 12 to 36,350 today, May 22. This represents an increase of 67% in just over a week, as seen in the following graph.

An increase in active addresses may be associated with overall positive market sentiment towards Cardano. This may lead to increased interest in purchasing and investing in ADA.

Ether ETF clears the picture for the rest of cryptocurrencies

Among the reasons that have driven the price of ADA and the rest of the altcoins is the high probability that spot ETFs for ether (ETH), the Ethereum cryptocurrency, will be approved during the morning of May 23.

This makes ETH a bullish catalyst, beyond bitcoin, for the cryptocurrency market, and among them is ADA.

Additionally, applications for ether-based spot funds are also important because the United States Securities and Exchange Commission (SEC), so far, has not decided to classify the cryptocurrency as a security or not.

In the event that the fund receives approval, it could be opening the door for ether is defined as a commodity (commodity), in the same way that happens with bitcoin, which could change the entire panorama for the rest of the cryptocurrencies.

Dan Gambardello, founder of Crypto Capita Venture, explains that “if Ethereum is not a security, then neither is Cardano, and an approval of the ETH ETF will provide clarity for Cardano.”

In his opinion, Cardano is not a security for two reasons. One of them is decentralization, since considers Cardano more decentralized than Ethereum. «That is not a fact opinion. ADA is managed. “It is made up of numerous independent validators, which ensures that no entity has control over the network,” she says.

The other reason is that unlike Ethereum, ADA “was distributed through public sales and coupons in Japan, ensuring wide and fair distribution. “This reduces the risk of ADA being viewed as a traditional securities fundraising mechanism.”

In addition to ETFs, a Cardano update will be released next June. This is Chang, the name of the next hard fork, which will add community governance to Cardano, thus increasing the decentralization of the network, according to what was reported by CriptoNoticias. All this (the ETFs and updating) becomes fuel for the price of ADA in the short and medium term.

What’s next for ADA, according to analysts

Regarding the future of ADA, Dan Gambardello believes that, if the bullish trend continues, it is likely that Cardano “is preparing its return to $1”, which he considers “appropriate” at this point in the cycle.

The analyst presents a graph in which he shows two speculative scenarios that They project the price of 1 dollar between the months of June and August. All this could be achieved if it manages to break the $0.5 barrier mentioned at the beginning of this article.

Javon Marks, market analyst, also believes that ADA may be headed for a bull run.

In the chart below, the analyst shows how ADA price showed significant progress since breaking the resistance trend in June 2020, allowing it to reach $2.7 and then its all-time high of $3. ,10 dollars.

The analyst contemplates a similar scenario for the cryptocurrency currently. With the last breakout seen on the chart, could be on track to reach $2 againbut based on the previous breakout, prices may be much higher.