Cardano (ADA) fell on July 21 as the market prefers increasing selling pressure around the most stable resistance levels in 2022 to the expected huge hard fork. Despite the long-awaited hard fork of Cardano, which could be launched at the end of July, ADA has run out of buyers. The price of ADA decreased by 5% during the day to $0.476. The decline was part of a larger pullback that began the day after it temporarily broke above its 50-day exponential moving average (50-day EMA; red wave in chart below) at $0.50.
As of October 2021, the 50-day EMA serves as the curved ADA resistance level. Additionally, upper trendline resistance of the larger descending channel pattern increased sell sentiment at the EMA’s 50-day ADA wave. In early June, an identical combination of resistance triggered a 35% price collapse towards the channel’s lower trendline. As a result, ADA’s continued downward movement threatens to push the price down to $0.384 by July or early August, down roughly 20% from the July 21st price.
ADA’s most recent price drop comes in the days leading up to the Cardano hard fork. Hard fork, nicknamed “Basil” was supposed to launch in June, but was delayed to the last week of July due to many ongoing issues. However, as of July 21, Input Output Hong Kong (IOHK), the company leading the development of the Cardano blockchain, did not specify a specific launch date.
Vasil is expected to significantly improve the performance and capabilities of the Cardano blockchain, including faster block production and better transaction speeds. In principle, the improvement can increase ADA adoption through increased network efficiency. However, Cardano has seen large price drops in the past following most network upgrades, suggesting a “sell the news” mentality throughout the market.
For example, the Alonzo blockchain update in September 2021 contributed to an increase of ADA by more than 200 percent to a record $3.16 before launch. However, the Cardano token fell by more than 85% after the upgrade. After falling to $0.384 locally on May 10, ADA rose only 25%, indicating that Vasil’s impact on the market was modest. However, not everyone is convinced. For example, analyst Lark Davis predicts that the token will “tear apart” after the hard fork if it manages to hold the 50-day EMA as support.
Until then, the ADA will likely be under “sell news“a pressure compounded by lingering economic concerns and their negative impact on cryptocurrency markets.
Featured Image: Megapixl @Shahurin