Cardano (ADA) has experienced a significant rally in its price as traders evaluate the implications of Ripple’s recent legal win on the broader cryptocurrency market. Following the July 13 ruling that XRP sales complied with U.S. securities laws, cryptocurrencies accused of being securities, including ADA, have found support to defend themselves in court.
ADA/USD witnessed a 20% increase within a 24-hour period, reaching its highest level in over a month at $0.379 on July 14. This surge comes after ADA suffered a 45% decline in June when the Securities and Exchange Commission (SEC) categorized it as a security during its lawsuits against crypto exchanges Binance and Coinbase. However, Cardano’s token has now managed to recover most of those losses.
While ADA’s price soared, it is noteworthy that whales, who hold significant amounts of ADA, seemingly remained inactive as the number of daily transactions exceeding $100,000 rose to its highest count since June. The distribution of Cardano’s supply also indicates a potential selling or redistribution of holdings by the richest ADA holders during the price rally.
Looking ahead, from a technical perspective, ADA’s price may face a consolidation or correction period due to its “overbought” state. On July 14, the daily relative strength index (RSI) for ADA crossed above 70, signaling the overbought threshold. Additionally, ADA/USD faces resistance near $0.35, where a multi-month trendline and the 200-day exponential moving average (EMA) intersect.
In the event of a substantial downward pull by bears, ADA’s price could test support levels around $0.32 and potentially drop further to $0.30 in July, representing a 12.5% decline from current levels.
Conversely, bullish investors argue for a potential double bottom reversal pattern on the weekly candle chart. If this pattern unfolds, ADA’s price could rally by as much as 150% from its current level, with a price target of $0.45 by the end of 2023.
It is important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research and assess the associated risks before making any investment or trading decisions.