- Cardano (ADA/USD) bounces off a critical support trendline during the Asia-Pacific trading session Friday.
- The blockchain asset expects to close above key moving average waves on the prospect of turning into a multi-asset chain following its hard fork on March 1.
- Nonetheless, a death cross formation offsets the probability of more price legs higher.
- Levels to watch
A sell-off in the Cardano market Thursday brought its benchmark instrument ADA/USD down by more than 11 percent.
The pair touched a week-to-date low of $1.02, about 31 percent lower than its record high established on February 27. It later underwent a modest recovery phase after finding support in a short-term upward trendline. The bounce prompted the price to attempt a close above its 50-period moving average, only to pull back later owing to higher selling pressure near the blue wave.
It appears likely for Cardano’s ADA to retest the ascending trendline support, further pressured by a death cross formed after the 20-period moving average slipped below the 50-period moving average. It signals additional selling pressure in the market in the short-term.
Should the sell-off continue, ADA/USD risks plunging towards its 200-period moving average. It is right now around $0.88. Meanwhile, an extended slipover below the orange wave would have traders view $0.80 as their downside target. The level has served as support all across February.
Bullish Fundamentals for Cardano
The downside correction in the Cardano market follows its 700 percent-plus price rally in 2021. ADA/USD rallied partially because of an overall upbeat sentiment in the cryptocurrency market, led by Tesla’s $1.5 billion investment into Bitcoin. Altcoins tend to tail the benchmark cryptocurrency’s price trends.
Second, the ADA price surged amid a broader rally among projects that rival Ethereum, the second-largest cryptocurrency by market cap and the leading blockchain network with smart contract functionalities. The transaction and gas fees on the Ethereum network surged aggressively during the February session, prompting speculators to make bets on its rivals.