After a strong start to the year for cryptocurrencies, yesterday saw the first significant correction of the year. At times, the price of Bitcoin fell by more than 5 percent from $21,600 to $20,400. The altcoins have fallen further down. This also affects Cardano buyers. ADA/USD fell more than 8 percent lower. Compared to the interim high at $0.37, Ada/USD has lost even more than 12 percent. The Cardano rate is currently trading below $0.33 again.
Cardano course corrected: share prices and responsible US investigations
There are several reasons for the correction. The American stock markets also saw a minus yesterday. The tech-heavy S&P 500 index fell more than 1.5 percent. Investors were worried by the news that Microsoft, the second most valuable company in the world behind Apple, will be cutting 10,000 jobs in response to the overall difficult economic situation. That did not match the renewed euphoria on the first trading days of the year and slowed the rally.
Crypto assets, which are highly correlated with share prices, were dragged by the decline. Additionally, a press conference by the US Department of Justice unsettled the crypto market. As reported by kryptoszene.de, the newly formed special crypto unit of the US judges has struck a blow against criminal activities in the industry. The co-founder of the crypto exchange Bitzlato was arrested and the exchange was closed. This should only be the beginning, the investigators stressed and indirectly referred to the FTX case.
New Cardano projects for 2023: stable coins and planned update
How will this correction be assessed? Is the Cardano Rally over and will the sell-off continue? Or is it just a breather before the next pump that investors could use to buy Cardano cheaper now? Kryptoszene.de looks at the current course of Cardano, analyzes the charts and shows the latest forecasts from analysts.
At the beginning of the year, Cardano was boosted not only by the recovery of the general market but also by bullish news about the network. The further development of the Djed stablecoin project, for example, which is due to start in January 2022, has contributed to this. This is an over-aligned algorithmic stablecoin on Cardano.
The $Djed 1.1.1 testnet version was last reactivated in December 2022 with new features like Vasil hard fork compatibility, activity history and more, as the developers announced via Twitter. ADA tokens act as collateral and SHEN is the backup coin. It is meant to be kept pegged to the US dollar by spending or burning it as needed.
And yes, $ jed still on track to launch THIS month 🚀
— Djed Stablecoin (@DjedStablecoin) January 14, 2023
The USDA dollar-linked stable is also scheduled to launch in the first quarter of 2023. According to the developer, this is stable and fully supported controls.
In addition, the next update for the Cardano blockchain is coming soon. Cardano Improvement Proposal 30 (CIP-30) is intended to enable dense transactions in the network so that more transactions can be processed at the same time.
In addition, Cardano was able to report positive trends in Total Value Locked (TVL) in the network. TVL rose to about $100 million at the start of the new year, up 50 percent and the highest since early October 2022.
In addition, there has been a recent increase in the activity of decentralized applications in the network, so-called dApps. The NFT market and Miniswap DEX were particularly popular.
Cardano’s chart shows that further corrections are possible
The progress in technology and the use of the Cardano network may indicate that the price of Cardano will continue to rise in 2023. But what situations does the technical analysis show for the short-term trend of ADA/USD?
Looking at the hourly candles, ADA/USD lost key support yesterday and tested it as new resistance this morning. This is a bearish sign and may indicate further downside. ADA may now be forming head and shoulders. To do this, however, the horizontal support at around $0.3 would have to be broken down. In this case, the technical price target of the correction is $0.245. Compared to the current rate, this would correspond to a price drop of 25 percent.
On the larger daily chart, the analysis also shows that the price of Cardano has so far failed to break above key resistance, below which ADA/USD has been since May 2022. The course was strongly rejected here already in August and under right now it looks like it won’t pass the resistance test again. If ADA fails to break out sustainably above $0.35, another correction is also likely.
Indicators could suggest bull strength
However, the bulls could make another attempt to break the resistance. Because the Relative Strength Index (RSI), an important technical indicator, currently shows that Cardano is no longer in the overbought area due to the recent correction. Although the asset is considered overbought from a value of 70 and ADA rose to a value of 80 last Saturday, it is now only at 62. This could give room to the bulls for another pump.
It is also bullish that the price of Cardano managed to break through the moving average price lines of the EMA ribbons. Furthermore, a bullish flip of these bands could be confirmed as the yellow lines establish themselves above the red lines. In a bull market, the yellow lines are usually above. However, the EMA ribbons have not yet been retested as new support, which is typical for a confirmed bull market. It is still possible that the flip will be banned at the last second, as was also observed in August 2022.
However, according to their Cardano price forecast, the analysts at Digital Coin Price assume that 2023 will be a bullish year for the price. They set the price target at $0.72, which corresponds to a gain of almost 120 percent at the current rate. If the assessment is correct, Cardano may be worth buying.
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