Cardano (ADA) started 2023 with an upward trend that retested the $0.2522 resistance level but has since failed to gather any meaningful momentum to sustain the run.
As of writing, Coingecko notes an increase of a measly 0.2%. This might be small gains, but is a great indicator that investor sentiment has reversed by the start of this fiscal year.
Can ADA Bounce Back?
Cardano in 2022 has been very bearish in terms of its native token ADA. Even after its Vasil hard fork, an event likened to the Ethereum Merge, the token still continued its downward spiral to its current price of $0.2491.
One reason that pushed ADA’s price down is the current macroeconomic situation. During the first quarter of 2022, the U.S. Federal Reserve raised rates until last month which is the seventh rate increase in 2022.
This in turn had adverse effects on the market, pushing the price of both traditional finance instruments and digital assets down. But 2023 seems to have a new effect on the struggling ecosystem.
Cardano Fared Better Vs. Competitors
The recent FTX debacle dealt a blow to any protocol or ecosystem affiliated with the failed exchange. Solana, a touted “Sam coin”, fell in value tremendously. According to recent news, Solana’s native token SOL has fallen so much that some are saying they are nearing collapse.
According to Santiment, ADA is undervalued at the moment, showing extreme exhaustion of the bears. Twitter users who are very bullish on Cardano share metrics that are increasing. With the upcoming on-chain upgrade bringing more features on the platform, investors on ADA might see more bullish action in the coming weeks.
Check the #Cardano on-chain stats. Everything goes up. pic.twitter.com/Q7pw44WTkA
— Cardano YODA (@JaromirTesar) January 1, 2023
With Solana down, the NFT market is shifting from Solana to Cardano. However, Cardano still has a long way to go to be even on par with Solana’s trade volume and value. ADA investors and traders could see the token break through the $0.2522 price resistance.
ADA total market cap at $8.7 billion on the daily chart | Chart: inew.news
A break on this price resistance level could be a new sign of life to the struggling ecosystem. In the long term, investors and traders should watch for macroeconomic developments as this has a strong effect on the crypto markets.
As markets recover, ADA’s current price movement could be a catalyst to a stronger bullish movement. However, ADA’s volatility is increasing which, if the $0.2522 resistance holds, can lead to drops as low as $0.2397.
-Featured image: The Independent