Though optimistic technical considerations exist, the Alonzo update did little to keep Cardano from plummeting in lockstep with the rest of the cryptocurrency market.
Despite the completion of its hard fork upgrade dubbed “Alonzo,” which included smart contract capability, the price of Cardano (ADA) plummeted on Monday in line with the other leading cryptocurrencies.
The ADA/USD exchange rate fell 10.67 percent to an intraday low of $2.30, owing in part to profit-taking by speculators following the pair’s 1,200 percent price surge this year. Furthermore, the intraday sell-off occurred during a moment of overall crypto market downturn, with leading coins Bitcoin (BTC) and Ether (ETH) plunging by 4% and 6.97%, respectively.
Cardano’s price plummeted as its fundamental foundation for the first time implemented a long-awaited smart contracts functionality on its public blockchain. The launch aims to tap into the expanding decentralized finance (DeFi) and nonfungible token (NFT) sectors, which are grappling with Ethereum’s dominant smart contract platform’s slower and more expensive transaction fees.
As a result, there was a lot of hope for an extended upswing in the ADA markets, with The Value Trend, a financial analyst at Seeking Alpha, predicting that the Cardano native token would approach $10 if it succeeded in displacing Ethereum as the top smart contract platform.
In the days leading up to the Alonzo upgrade, the belief helped ADA/USD yield substantial earnings. The pair was selling for as little as $1 on July 20. On September 2, its value soared to a new high of $3.16, a 200 percent increase.
Bullish continuation signals persist
Following a strong run upward, bullish assets tend to consolidate sideways or down as some traders seek to protect their winnings. Simultaneously, long-term bullish investors purchase the asset from weak hands in order to construct long-term investment strategies.
Following a strong 200 percent+ bull run, the Cardano chart below suggests a similar consolidation phase. As a result, there’s a good chance the ADA/USD exchange rate will continue to rise.
The rectangle pattern appears like a bull flag. And, as a general rule, the profit target for bulls in a bull flag scenario is the same as the length of the previous uptrend.
A break over the upper bull flag trendline (at $2.93) might take the ADA/USD to $4.50.
To sustain its interim bullish tilt, the Cardano token would need to keep its footing above its 50-day exponential moving average (50-day EMA; the velvet wave) near $2.27. A break below the bull flag support and the 50-day EMA floor might take ADA down to $1.92, where it has been since mid-August.
Deeper price targets were shared by analysts, with a pseudonymous Twitterati detecting a “Double Bottom” situation and claiming that traders are selling the news.
#Cardano smart contract upgrade so far going as I have predicted: Sell the news.— Rautakansleri (@rautakansleri_) September 13, 2021
The price also formed a double top and now forming a lower low. If $2.25 is breached then down we go even more.
$1.20 soon? pic.twitter.com/riFirqmCgz
Cerbul, another market analyst, said ADA’s ongoing plunge was not due to the “sell the news” sentiment, adding that more capital would flow into the Cardano ecosystem from the DeFi sector.
“Accumulate,” he said.