The Foundation for Secure and Scalable Applications

Cardano is a blockchain platform that facilitates transactions using its native ADA cryptocurrency while also empowering developers to create secure and scalable applications. It is linked with numerous payment programs, and a variety of projects have been developed on the Cardano network.

In order to complete transactions and engage in governance, Cardano users must purchase ADA. Ownership of ADA determines the slot leader responsible for adding new blocks, and the distribution of transaction fees within the blocks. ADA tokens are also used to vote on software policies, such as inflation rates, which incentivizes participants to hold ADA, thus ensuring its future value.

The past few weeks have been very successful for Cardano (ADA), with its value increasing by more than 35% since March 10. According to on-chain data from Santiment, a group of whales with significant holdings began accumulating ADA shortly after the Cardano platform launched the native DJED stablecoin.

Between February 2 and April 11, whales holding between 1 million and 10 million ADA tokens accumulated an additional 210 million coins worth approximately $84 million. When such large investors accumulate a cryptocurrency, it suggests growing confidence among institutional investors.

This increased demand applies upward pressure on the price, potentially attracting other retail investors and fueling bullish sentiment. However, investors should remain cautious as the broader macroeconomic environment remains uncertain.

Inflation Remains Significantly Higher Than the Fed’s Target of 2%

The Bureau of Labor Statistics reported that in March, the Consumer Price Index (CPI) increased at a slower-than-expected pace. The report showed a 0.1% rise in the prices that urban consumers pay for a basket of goods and services from February, and a 5.0% increase year-over-year, which was below the consensus expectations of 0.2% and 5.2%.

However, the core CPI, which excludes volatile food and energy prices, posted a monthly gain of 0.4% and 5.6% on an annual basis. This indicates that the Federal Reserve is likely to increase interest rates by 25 basis points in May.

Currently, the federal funds rate stands between 4.75% and 5%, the highest level since 2006, yet inflation remains far above the Fed’s target of 2%. Historically, higher interest rates lead companies to reduce spending (particularly on hiring), and analysts worry that the Fed’s aggressive stance could push the economy into a recession, which might hurt corporate earnings and the stock market.

The recent failures of Silicon Valley Bank and Signature Bank have created turmoil in the banking sector. Federal Reserve committee members have indicated that the economy could enter a “mild recession.” They also stated that the U.S. banking system remains “sound and resilient,” but if negative macroeconomic conditions worsen more than anticipated, risks could skew to the downside for the economy and stock markets. This is especially concerning since recessions tied to financial market crises are often more severe and prolonged than average recessions.

Wells Fargo analysts have stated that although the U.S. stock market found stability after the banking crisis, conditions will likely worsen in the next few months as the economy absorbs the consequences of aggressive rate hikes.

“We believe further pain is in store for equities as the Fed’s monetary tightening, along with a credit crunch triggered by liquidity issues at banks, will weigh on economic growth. This presents significant risks to corporate earnings, and we expect a 10% correction in the S&P 500, with the SPX possibly falling to 3700.”

– Wells Fargo Analyst

Analysts now forecast a 5.2% decline in the aggregate earnings of the S&P 500 for the first quarter compared to the previous year, with a further decline expected in subsequent quarters of 2023. If the U.S. stock market experiences losses, investors should be aware that the cryptocurrency market tends to closely mirror these trends. A downturn in equities could also be reflected in the crypto market.

Technical Analysis of Cardano (ADA)

Cardano (ADA) has gained more than 35% since March 10, 2023, increasing from $0.297 to a peak of $0.423. The current price of Cardano (ADA) stands at $0.416, and as long as the price remains above $0.35, there is no indication of a trend reversal, keeping ADA in the BUY-ZONE.

Key Support & Resistance Levels for Cardano (ADA)

The chart (from July 2022) highlights crucial support and resistance levels, which can guide traders in forecasting price movement. Technical analysis suggests that bulls are currently in control of Cardano’s price movement, and if ADA rises above $0.45, the next resistance target could be at $0.50.

The critical support level stands at $0.35, and if the price falls below this threshold, it would signal a “SELL” signal, with the next potential target at $0.30. Should the price drop below $0.30, which represents significant support, the next level could be around $0.25 or lower.

Factors Driving the Rise in Cardano (ADA) Price

The trading volume for ADA has surged in recent days, and on-chain data from Santiment reveals that whales have accumulated 210 million ADA tokens worth approximately $84 million between February 2 and April 11.

This suggests growing confidence among investors, potentially exerting upward pressure on the price. Technical analysis indicates that ADA still has potential for growth, and if the price surpasses $0.45, the next resistance target could be at $0.50.

Traders should also note that ADA’s price often follows Bitcoin’s movements. If Bitcoin’s price rises above $33,000, it could result in ADA reaching higher price levels as well.

Factors Leading to the Decline of Cardano (ADA) Price

While Cardano (ADA) has experienced notable success in recent weeks, investors should remain cautious moving into the second quarter of 2023. Economic experts have warned of a potential global recession, which could cause the price of Cardano to decline.

The key support level for ADA is $0.35, and if the price falls below this level, the next target could be $0.30. Since ADA’s price tends to correlate with Bitcoin’s price, any drop in Bitcoin below $28,000 could negatively impact Cardano’s price as well.

Expert Insights and Analyst Opinions

Cardano (ADA) is currently advancing, but investors should keep in mind the ongoing macroeconomic uncertainty. Central banks are likely to continue raising interest rates to combat inflation, which could harm risk-sensitive assets like cryptocurrencies.

Analysts expect a 5.2% decline in the first-quarter earnings of the S&P 500, with even more significant losses in the upcoming quarters of 2023.

According to Wells Fargo analysts, the U.S. stock market could experience a 10% correction in the next 3-6 months, with the SPX potentially falling to 3700. Such a downturn would likely negatively affect the price of Cardano (ADA).

Currently, bulls are in control of Cardano’s price movement, but the volatile nature of cryptocurrencies may prompt investors to sell if a downturn occurs in the broader market.

Izjava o odricanju od odgovornosti: Cryptocurrency is extremely volatile and may not be suitable for all investors. Never invest money you cannot afford to lose. The information presented here is for educational purposes only and should not be considered as investment or financial advice.