Cardano Risks 60% -90% Drop, ADA Trader Warns Painting Classic Bearish Pattern

Cardano is close to achieving the title of a full-blown smart contract platform after a critical update in mid-July. The founder of the project, Charles Hoskinson, confirmed that they recently processed the sales of more than $ 10 million in non-fungible tokens on their public ledger.

What’s more, An NFT and DeFi Marketplace called Spores Network, which raised $ 2.3 million in a fundraiser, said it would roll out its services over the Cardano chain for lower transaction costs, lower carbon footprint and higher transaction throughput.

But the growth of Ethereum’s rival as a project might not lead to greater adoption of its native cryptocurrency, ADA, at least according to an analysis shared by Peter Brandt, CEO of global trading firm Factor LLC.

A 60% -90% drop ahead?

The veteran analyst shared a bearish setup for ADA in a tweet posted on Friday. Cited a classic technical pattern, known as Shoulders, head and shoulders, to predict a bearish scenario for the Cardano token which has already risen more than 600% in a matter of a year to date.

Specifically, The Shoulders, Head and Shoulders pattern is formed when the price forms three consecutive peaks above a single support level, on the condition that the middle peak is higher than the other two, which are generally the same height. The price eventually breaks below the support levels, also called the neckline, and falls as much as the maximum height between the top of the mid-peak and the support level.

ADA visibly conforms to the description, as shown in the table shared by Brandt.

Cardano’s shoulder, head and shoulders schematic. Source: TradingView.com, Peter Brandt

The analyst envisioned that the ADA / USD exchange rate would fall to $ 0.12, 90% less than the pair’s current offer near $ 1.26. A percentage-based calculation of the Shoulders, Head and Shoulders pattern marked her profit target near $ 0.35, 60% less than her neckline.

Brandt recalled his track record of predicting market spikes to add strength to his depressing Cardano prediction. For example, one of their 2018 analyzes, which involved Litecoin, corrected detected a descending triangle setup after the altcoin’s rise from $ 4 to $ 420 during the 2017 uptrend.

“I remember being mercilessly mocked when I identified this top on the LTC / USD pair in mid-2018,” Brandt tweeted. “Hey Cardano trolls, take aim.”

But can 2018 be repeated?

The drop that followed the 2017 uptrend originated mainly due to the so-called initial drop in the supply of coins. A study conducted by Statis Group He noted that more than 80% of blockchain startups that raised funds in Bitcoin, Ether, and other major currencies at the time, failed to come up with a working product.

Meanwhile, most of them turned out to be outright scams that sold the raised crypto capital, thus creating downward pressure across the market. Litecoin, Bitcoin and Ether plummeted by more than 80% in 2018 as the ICO FUD declined investments.

Conversely, the 2020 uptrend was caused by macroeconomic errors. The Federal Reserve’s efforts to contain the economic fallout from the Covid-19 crisis saw the launch of an unprecedented quantitative easing program.. As a result, near-zero interest rates and the purchase of $ 120 billion worth of assets sent investors looking for better alternatives in riskier markets every month.

As a result, Bitcoin skyrocketed from less than $ 4,000 in March 2020 to more than $ 65,000 in April 2021. Meanwhile, altcoins, which tend to follow Bitcoin trends, have also increased. The Cardano ADA was one of them; it is now trading more than 7,000% higher from its mid-March low.

The 30-day correlation between Bitcoin and ADA is close to 0.85 above zero, according to the data. provided by Crypto Watch.

Simon Kim, CEO of crypto hedge fund Hashed, told Cointelegraph in March that the 2020-2021 crypto market is completely different from that of 2017-2018, noting that the market now operates on a completely different foundation. He said:

“First, several DeFi projects are creating value based on a clear business model. Second, we are seeing record active investment by institutional investors and finally several entry and exit ramps, including not just PayPal and Visa, but also big banks, are now emerging. “

Rekt Capital, a pseudonymous market analyst, he pointed that ADA needs to close above its weekly close of $ 1.30 to confirm its long-term bullish trend. Cointelegraph’s Rakesh Upadhyay also noted that a breakout above $ 1.33 would increase the potential for the Cardano token to extend its target to the upside towards $ 1.90.

“Conversely, if the price turns down from the current level or above resistance and slides below $ 1.20, it will indicate that the bears continue to sell at each higher level. That may result in a retest of the critical USD support. 1, “warned Upadhyay.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Each investment and commercial movement involves a risk, you must do your own research when making a decision.

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Cardano Risks 60% -90% Drop, ADA Trader Warns Painting Classic Bearish Pattern

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