Will Cardano Be the Next Cryptocurrency to Make All-Time Highs?
The cryptocurrency market has been going crazy. Bitcoin (CCC:BTC-USD) is fresh off all-time highs. The next largest crypto almost made new highs too, that being Ethereum (CCC:ETH-USD). But what about Cardano (CCC:ADA-USD) now?
The cryptocurrency made a powerful push higher going into September, although it topped around the same time the S&P 500 did. The “risk-off” approach in equities spilled over to crypto, as many coins had trouble finding upside momentum.
However, that became less of an issue as the No.1 and No. 2 cryptocurrencies by market capitalization began exploding to the upside. I have been calling for new highs in Bitcoin as a result and argued that Shiba Inu (CCC:SHIB-USD) shouldn’t be too far behind.
Now with Cardano in the fray, should we look for new highs in this one too?
Given that it’s one of the few coins that haven’t popped in recent weeks, I think it’s one we need to focus on.
Cardano came onto the scene earlier this year, fetching a bid in January and February when the rest of the growth world was surging. Cryptos were rallying, growth stocks were flying, and SPACs were hitting the stratosphere. However, Cardano’s rally didn’t begin in earnest until later in the year.
In May, the cryptocurrency caught a big boost, ripping above $1.50 and nearly hitting $2.50. In August, another powerful rally took it through the highs and just north of $3.
Now bulls want to know if the recent consolidation will be enough – in combination with the rally in other cryptocurrencies – to send Cardano to new highs.
To get there, we need to see the stock clear this wide down-channel range, as well as the 50-day moving average. If ADA-USD can do that, it opens the door to the May high near $2.46. Above $2.50 opens the door to the 61.8% retracement near $2.60. Should Cardano clear all of these levels, $2.80 becomes my next area of interest, followed by $3 to $3.09.
If Cardano clears $3, then it will certainly get investors talking about new all-time highs.
On the flip side, the $2.05 to $2.10 area has been short-term support. Should ADA-USD lose this area, not all hope is lost. However, it will deal a blow to the bulls if this name loses the $2 level.
That will put the recent low near $1.80 in play, along with the 200-day moving average. While that could prove to be a great dip-buying opportunity, failure to hold this area could open the door to $1.50.
For now, Cardano might be a “delayed reaction” in the crypto space, meaning it too could catch fire with the other names. However, if we start to break down from here – for instance, by losing the $2 level – this type of relative weakness should be viewed as a concern.
Breaking Down ADA-USD
A lot of investors are asking themselves, “What is Cardano, and should I buy it?”
The answer isn’t as cut and dry as most would want it to be, though. If you’ve made it this far in the article, you’re at least comfortable with the idea of buying cryptocurrencies. Despite the larger size of the Cardano market cap, I would still consider it a riskier coin versus Bitcoin or Ethereum.
That said, if we approach a risky asset as risky and appreciate the volatility, then we can take a proper position size in it.
I previously talked about using a “lotto” size in Shiba Inu, which allows investors to minimize the pain of a major correction but ride what could be a huge rally if momentum works out in bulls’ favor.
I am taking the same approach in Cardano, as I don’t want to stake my portfolio’s results on a low-priced cryptocurrency. That said, if it catches fire, I do want the opportunity to ride out some large gains.
Cardano is provably secure against bad actors and Sybil attacks. Every transaction, interaction, and exchange is immutably and transparently recovered, and securely validated using multi-signature and a pioneering extended UTXO model.
Does that make it the go-to cryptocurrency? Not necessarily. For one, it’s lacking widespread knowledge of its existence. But if the charts catch fire, you can bet that it will become a bit more well-known.
For now, keep Cardano’s chart levels in mind.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.