ADA price drops 10% after expected launch of Cardano smart contracts

The price of Cardano (THERE IS) fell on September 13 in line with the other major cryptocurrencies despite the completion of its hard fork update called “Alonzo”, which introduces smart contract functionality..

ADA / USD fell 10.67% to hit its intraday low of $ 2.3, in part due to profit-taking sentiment among traders following a price rally of more than 1,200% for the pair this year. In addition, the intraday sell-off also emerged in the period of a general decline in the cryptocurrency market, with the main tokens Bitcoin (BTC) y Ether (ETH) falling by 4% and 6.97%, respectively.

The 10 best cryptocurrency tokens and their performance in the last 24 hours. Source: Messari

Cardano’s downfall came as its core base first rolled out a highly anticipated smart contracts feature on its public blockchain network.. The launch seeks to take advantage of the burgeoning sector of decentralized finance (DeFi) and non-fungible tokens (NFT), which face the slower and more expensive transaction fees of the leading smart contract platform, Ethereum.

As a result, expectations of a prolonged bullish boom in ADA markets were high, with Value Trend, a financial analyst at Seeking Alpha, waiting for the native Cardano token to hit $ 10 if it surpasses Ethereum to become the leading smart contract platform.

In general, the belief helped the ADA / USD pair make strong gains in the days leading up to the Alonzo update. On July 20, the pair was trading as low as $ 1. Later, on September 2, its value has risen to an all-time high of $ 3.16, which is a rebound of 200%.

Bullish continuation signals persist

Bullish assets tend to consolidate laterally or to the downside after a strong bullish movement, mainly when some traders decide to lock in their profits. At the same time, investors with a long-term bullish outlook buy the asset from weak hands to build long-term investment strategies.

The Cardano chart below suggests a similar phase of consolidation is being experienced after delivering a strong bull run of over 200%.. As a result, the probability that the ADA / USD pair will continue its uptrend remains high.

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Daily price chart of the ADA / USD pair with bullish pennant formation. Source: TradingView.com

Rectangle pattern appears as a bullish pennant (Bull Flag). And, as a general rule, The profit target for the bulls in such a scenario is the same as the duration of the previous uptrend.

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Daily price chart of the ADA / USD pair with bullish pennant target. Source: TradingView.com

A break above the upper bullish pennant trend line (at $ 2.93) could put ADA / USD on its way towards $ 4.5.

Furthermore, the Cardano token would need to hold its support point above its 50-day exponential moving average (50-day EMA; the velvet wave) near $ 2.27 to keep its interim bullish bias intact. A dip below the Bull Flag support and the floor of the 50-day EMA would risk sending the ADA to $ 1.92, its support line since mid-August.

Analysts shared deeper price targets, with one trader dubbed Twitterati spotting a “double bottom” scenario, adding that traders are selling the news.

“The #Cardano smart contract update so far is going as I have predicted – sell the news.

The price also formed a double top and is now forming a lower low. If $ 2.25 breaks, then we will go even lower. “

Cerbul, another market analyst, He said that ADA’s ongoing decline was not due to “sell the news” sentiment, adding that more capital would flow into the Cardano ecosystem from the DeFi sector.

“Build it up,” he said.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade move involves risk, you need to do your own research when making a decision.

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ADA price drops 10% after expected launch of Cardano smart contracts

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