Cardano is now on the Robinhood exchange, but ADA bulls are running out of steam and the price could drop by 40%.
Small gains on the upside are seen in ADA, but they may not last long due to weak technicals and macro factors.
Since August 31, the Cardano (ADA) market has been getting good news one after the other. It was listed on Robinhood, a U.S.-based retail investment platform, and its first protocol for lending and borrowing, Aada Finance, came out.
Also, the creators of Cardano, IOHK, said that they are close to getting “three critical mass indicators,” which would mean that their long-awaited Vasil hard fork would be released in September. Vasil wants to improve Cardano’s ability to scale and the speed at which transactions can be made by using pipelining.
By changing the Plutus script, which is a programming language used for smart contracts on the Cardano blockchain, the upgrade could also make DApps and smart contracts better.
But the positive news hasn’t brought in enough buyers, as the price trend of ADA over the last 24 hours shows.
Bear market rally
On the daily chart, ADA’s price went up nearly 9% from its sessional low of $0.424 to its intraday high of $0.462 on September 1.
Still, the move was accompanied by fewer trades, which suggests that traders are less sure of an extended rally.
After a sharp 28.5% drop, ADA’s price went up by a small amount. This is usually due to short covering, which is when traders buy back tokens they borrowed to close their open bearish position, briefly raising the spot price.
So, Cardano’s rise may be a rally in a bear market. This is because ADA is vulnerable to macroeconomic risks, which have kept the ADA/USD pair almost exactly in sync with U.S. stocks.
On September 1, for example, the correlation between ADA and Nasdaq was 0.80.
Breakup of a descending triangle coming?
From a technical point of view, ADA’s daily chart has been showing a descending triangle pattern since May 7.
In more detail, descending triangles show up when the price stays within a range set by a falling upper trendline and a flat lower trendline. They usually end when the price breaks below the lower trendline and, as a rule, can fall as much as the maximum triangle height.
As shown below, ADA is now testing the lower trendline of its descending triangle to see if it will break. If the pattern stays the same, the token’s price will drop to $0.268 by September, which is a 40% drop from where it is now.
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