ADA, the cryptocurrency that powers Cardano’s smart-contract-enabled layer-1 blockchain protocol, is coming under 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, as the cryptocurrency is 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.
Cryptocurrencies and traditional asset classes are experiencing a risk-off reaction today, after the PCE Price Index report for January was released earlier this morning. The report 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, which could have a negative impact on these markets.
ADA is back under its 200-Day Moving Average at $0.3815 after its latest decline. This means it is now over 10% below earlier monthly highs in the $0.42s. Cardano is now at a technical crossroads, and today’s close will be key.
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 seems likely. 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 would become more likely.
This uptrend has been in play since the end of 2022, and if it breaks below the trend line and the 50DMA just under $0.37, then a drop back to the double bottom in the $0.35 area is likely. However, if the crypto bulls can regain control and push ADA to close Friday’s session back above the 200
The Cardano ecosystem is thriving in 2023, thanks to its passionate community of supporters and developers who continue to launch innovative new protocols on the blockchain, including the recently-released overcollaterized algorithmic stablecoin Djed. Assuming that cryptocurrency markets continue their gradual recovery from last year’s highly oversold levels, ADA can certainly continue to appreciate in value.