Cardano (ADA) soared 67%, but then growth stalled and a correction is on the horizon. Is the launch of the Cardano Djed stablecoin going to help the token?
On January 31st, the developers of Cardano launched the super-secure algorithmic stablecoin Djed, as they had previously promised. This was a major milestone in the development of the Cardano blockchain.
The level of overcollateralization of the stablecoin will range from 400% to 800%. Thus, as the developers explain, “it will have 4 to 8 times the base value behind it compared to the total amount of Djed coins issued.
The exchange rate of the coin will be pegged to the U.S. dollar and will be backed by the ADA and the SHEN reserve coin. If the reserve ratio falls below 400%, the project will stop minting or burning SHEN and minting Djed. If the ratio rises above 800%, it will not be possible to grind SHEN.
However, the rate of ADA, the native token of the Cardano network, ignored such a significant event for the ecosystem.
Cardano starts to lose momentum
As the technical analysis shows, since the beginning of 2023, the exchange rate of Cardano has had a growth of 67%. In the process of growth, the price made a bullish breakthrough of the long-term descending resistance line and formed a high at $0.400 on January 30.
However, the price formed a bearish candlestick the following day, potentially indicating that the uptrend is ending. In addition, the daily RSI gave bearish divergence signals, confirming this decline.
This bodes well for an imminent drop in the ADA rate, which could test the horizontal support area at $0.328.
Meanwhile, the main resistance level is at $0.417. If the day closes above it, the growth will continue and it may cause the renewal of the highs around $0.55.
Cardano: Will February pass without growth?
The 6-hour chart supports the thesis of a continued decline, which is associated with the coin’s bearish momentum in February.
Cardano completed the formation of a 5-wave bullish structure, the fifth wave of which was represented by the pattern of an ending diagonal triangle, as evidenced by the shape of the wedge.
A bearish breakdown of the wedge will confirm that our analysis is correct and that the price has begun a decline towards the 0.382-0.5% Fibo retracement levels around $0.319-$0.338. This correction could take a good part of February and the bearish breakout from the wedge itself could take place within the next 24 hours.
On the other hand, a strong close above the wedge would neutralize the bearish outlook. In this case, Cardano may begin to rise towards $0.55.
February Price Forecast for Cardano (ADA)
Thus, the ADA price forecast for February is bearish. A decline to the $0.319-$0.338 range is likely. A daily close above $0.39 would invalidate the bearish scenario and could trigger a rise to $0.55.
WARNING!
The contents of this article are not to be construed as legal, business, investment, or tax advice.
This article is intended for use and should be used for informational purposes only.
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