Cardano’s ADA token has enjoyed some bullish activity recently, reaching its highest level in over a month today.
CoinDesk data shows the digital currency climbed to $1.10 around 12:30 p.m. EDT.
At this point, it was trading at its highest price since February 16, additional CoinDesk data shows.
Since then, the cryptocurrency has pulled back a bit, but has retained most of its recent gains, trading at $1.07 at the time of writing.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Following the latest ADA price movement, several market experts pointed to key fundamentals affecting the price of the digital asset and important technical levels that traders should watch out for.
Ben McMillan, CIO of IDX Digital Assets, highlighted some important developments that coincide with the recent surge of ADA.
“After a long build-up, Cardano has finally seen a massive increase in projects being developed on its blockchain,” he said.
“It is also worth noting that Cardano has the highest allocation to Grayscale’s new ‘smart contract platform X-Ethereum Fund’,” McMillan said, referring to the investment vehicle announced yesterday.
The fund will focus on digital assets tied to blockchain platforms other than Ethereum, which leverage smart contracts.
However, he added that “this recent surge is relatively small in volume and is coming after Cardano started at over $1.50 (and peaked at over $3 in 2021).”
“So it appears to be a combination of technical bounce from oversold levels on the back of encouraging developments regarding the longer-term outlook.”
“The key will be that it can hold the psychological $1 level from here,” McMillan concluded.
William Noble, chief technical analyst at research platform Token Metrics, also emphasized some important technical levels.
“Cardano is forming a long-term bottom similar to that of January 2021. If Cardano holds above the support level of 1.03, ADA could easily move to the next resistance point at 1.17,” he added.
“Cardano is shifting from base building to trending. If ADA continues to rally, 1.45 could be the next big picture objective.
“ADA maximalists will need to see ADA above that level in order to discuss a target above $3.”
Ben Armstrong, founder of BitboyCrypto, also offered technical analysis, highlighting the various levels.
“After finding support at .78 ADA/USD broke the strong psychological resistance of 1.00 with a rise of almost 40%,” he said.
“ADA is finding resistance at 1.08, which is also a golden opportunity from March 2020 lows.”
Armstrong added that if the digital asset sell-off can break through this accumulation of interest, it will likely face its next area of key resistance at $1.56.
However, should it fall back, it will face “key support coming at .702 Fibonacci level at .93”.
Mark Ellenowitz, co-founder of Ethereum-powered exchange Upstream, spoke to the key variables influencing ADA’s price action and commented on the digital currency’s outlook.
“Cardano’s breakout today reflects a bullish trend in the crypto market,” he said.
“Cardano also has a base of supporters who are exclusively dedicated to the project and are therefore willing to risk a significant amount of capital for it,” Ellenowitz said.
“The biggest factor driving this price movement is that Cardano has just seen a huge influx of tokens into the pool,” he said.
“Once traders saw this influx, they started buying in relatively large numbers. Naturally, prices have increased and may continue to do so if this apparent micro rally continues.”
“That being said, there is always question about the use cases available on the Cardano network – after all, it has been slow to implement the smart-contract utility and so there are a lot of questions about whether it will be a Solana, Could keep up with competitors like Avalanche and Terra,” Ellenowitz said.
“If the Cardano network does not experience higher demand due to relative lack of utility, it is safe to say that price action for $ADA could easily go south – and quickly,” he cautioned.
Ellenowitz identified some important technical levels that traders should watch out for.
“Cardano rallied around $0.5 during its last major breakout, followed by a drop below, and the current uptrend seems just as strong.”
“So it is not beyond the realm of possibility that it could continue an upward move, anywhere from $1.25 to $1.30, before hitting key resistance,” he said.
“In the medium term, I think $ADA has strong support at $1 and is likely to hold.”
“But in this volatile market, it seems nothing is sustainable above this level.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, eos and sol.