Crypto market overview
Bitcoin (BTC), the first cryptocurrency launched in 2008, was built on the first version of blockchain technology that by today’s standards, would be considered obsolete. Bitcoin can therefore be considered as Blockchain’s version 1.0. In 2014, Ethereum (ETH) came on board as a blockchain network that had an added capability to host decentralised applications. Ethereum is therefore the first of the second generation blockchain networks, which saw the emergence of others such as Neo, EOS, etc. These were the blockchain version 2.0 projects.
Over time, blockchain 1.0 (Bitcoin) and blockchain 2.0 (Ethereum) started showing inherent deficiencies. Not that they were bad or defective but the passage of time, events and advent of new use cases meant that newer blockchain networks and applications needed to be developed. Problems of scalability and speed of transactions, as well as the deficiencies in the coding language for both protocols saw the development of Cardano (ADA). Cardano was, thus, birthed by the need to create a platform on which smart contracts could be executed more efficiently, with the ability to add side chains.
Cardano was launched in September 2017 and as of January 26, 2020, it has achieved a market capitalisation of $1,137,610,416. It is number 11 in terms of the most capitalised cryptocurrencies (Coinmarketcap) and has a circulating supply of 25,927,070,538. Of all blockchain protocols that have similar function, only EOS stands above it in the number eight position in terms of market cap.
Cardano was designed with three goals in mind:
To promote interoperability between various blockchain networks.
This feature of Cardano is meant to allow multiple blockchains to communicate with each other without the need for intermediaries.
To enhance scalability
This feature is meant to enable a blockchain network to carry extra data loads without the need for additional investment in massive computational power. This reduces cost, consumes fewer resources and makes the network a more efficient way to do business. The ability to add side chains to the main blockchain network using the Ouroboros consensus mechanism is what has made this possible.
To promote data integrity
Furthermore, Cardano ensures that the integrity of the blockchain can be maintained without all nodes in the network having a copy of all transactions done on the blockchain. This is achieved using a process known as partitioning. An alternative way to do this is to use the sidechains.
To sustain the network even when some developers have paucity of funds, the Cardano Treasury was created. A small portion of all transactions feeds the treasury, and developers with great ideas can be voted by the community to get a portion of treasury funds for the project. The token used as the means of exchange is the ADA token.
ADA/BTC is in an inverse relationship with Bitcoin; therefore, the ADA/BTC and BTC/USD pairs tend to move in opposite directions. Cardano’s price direction in the medium term and long term will therefore be decided by the fundamentals, while short-term price moves will be tied to the behaviour of Bitcoin in the crypto market.
But how has Cardano performed in the past three years?
Cardano latest price news
Generally speaking, the price of several cryptocurrencies are determined by some fundamentals, which can be outlined as follows:
- Regulatory decisions in areas where the coin’s project owners are operating;
- Project developments such as upgrade of a network or new applications built on the network;
- Strategic partnerships and collaborations, all geared towards increased adoption.
Cardano has come under some criticism for its slow pace of development. After underperforming for close to two years, the team at Cardano have decided to tinker with some of the project’s fundamentals in an effort to shore up the value of the ecosystem and the ADA token which fuels it.
One change that has been made is an adjustment to the management team of the Cardano Foundation. Two new members were appointed to Cardano Foundation’s Council. These new members are expected to help Cardano achieve its 2020 milestones, which include full custody transfer of Cardano as well as the roll out of additional smart contracts. One of the new hires is Tamara Haasen, who has served as chief of staff of Input Output Hong Kong (IOHK), the original developer of Cardano.
In a recent interview, Haasen provided some hints as to the focus of the Cardano Foundation this year. According to her, the Cardano Foundation wants to quicken the pace of the rollout of its projects. To this end, the Cardano Foundation intends to hire a good number of specialists, especially social media experts to help drive adoption using the various social media. There will also be recruitments in the commercial section to help develop new channels through which Cardano can be monetised.
In more Cardano crypto news, CEO of IOHK Charles Hoskinson attended the 2020 World Economic Forum in Davos, Switzerland, to forge new partnerships. As reported in the latest Cardano coin news, he has not hidden his desire to up the advertising push of Cardano in 2020.
Already, the Davos trip is yielding fruit for Hoskinson. Privilege, an EU Consortium, will seek to use Cardano to address potential use cases for Cardano’s blockchain. The consortium features companies such as IBM, three universities and IOHK. Cardano has also entered into a partnership with the GenTwo AG, which will see the launch of a financial product based on the Cardano blockchain.
Other partnerships that have either been entered into or are in advanced stages of discussion as a result of Hoskinson’s Davos trip include:
- The first public sector collaboration with the government of Georgia;
- Berkman Klein Center;
- McCann Dublin (an advertising agency).
These are the latest Cardano (ADA) news of note for 2020.
Cardano price analysis
The Cardano news events described above are not expected to have an immediate impact on the price of the Cardano (ADA) token. Rather, immediate impact is expected to come from what is happening elsewhere, which is the behaviour of Bitcoin on which most of the market is hinged. The ADA/BTC pair is, therefore, going to be more sensitive in the short-term to what happens with Bitcoin rather than the latest Cardano news.
Technical price analysis for Cardano starts from the weekly chart. Here we can see that ADA/BTC is still in a downtrend, with price nearly at all-time lows. It closed trading at 1am GMT on Monday January 27 at 512 satoshis (i.e. 0.00000512).
The medium-term resistance levels of note are the 0.00000922 (922 satoshis) level, where price found support on September 3, 2018, May 1, 2019, and June 10, 2019, before being broken shortly after. These price levels will therefore function as the new initial resistance level in what is known as a role-reversal. Above this level, we have the 23.6 per cent Fibonacci retracement level at 0.00001944 (1944 satoshis), which is also a site of previous lows seem on March 19 and July 9, 2018, as well as a previous high in role reversal on March 25, 2019. The Fibonacci levels were derived from the swing high of January 2018 to the swing low of November 2019.
A look at the daily chart below reveals the price picture for the short term. Here, we see more short-term areas of support and resistance. Initial resistance is seen at 539 satoshis, where price action has formed tops in the past three months without being able to breach the resistance formed by those tops. Furthermore, we also have resistance areas at 652 and 922 satoshis. The 652 satoshis price level is the area where a previous low of July 4, 2019 was seen, with the same area now being a previous high after role reversal occurred. We also see the 922 satoshis level which was identified on the weekly chart.
Enhancement of the daily chart using the zoom tool shows that price action for ADA/BTC has pushed up towards the 539 satoshis resistance, albeit within the confines of an ascending channel. The Relative Strength Index (RSI) is also approaching the overbought area but still has room for further upside. The situation with the RSI as regards the price behaviour at the resistance requires close monitoring this week.
Cardano technically remains in a downtrend (long-term outlook). However, it has a neutral outlook because ADA/BTC has been in a range for several months.
Short-term Cardano price forecast: what experts say
Generally speaking, a look at various sources on the internet generally agree that a bullish recovery will be the immediate price response for ADA, albeit with a lot of turbulence.
The technical Cardano price analysis done above shows that price needs to break the 539 satoshis price level to the upside in order for the pathway towards 652 satoshis to be created. This break must either be confirmed by a 3 per cent penetration close above the resistance by the weekly candle, or by two successive candles on the daily chart closing above the 652 satoshis. This helps reduce the likelihood of a stop hunt from “whale” investors. The 1944 satoshis resistance lies further ahead and requires a similar strong upside break of the 652 satoshis mark to become the next target. The recovery may get to a point where prices become cheaper to initiate further rally sales.
On the flip side, failure of ADA/BTC to break above the 539 satoshis level could lead to further breakdown of price, which brings the support levels of 448 satoshis and 338 satoshis (November 2019 low) into focus. Supporting this move will be two factors: a strengthening of Bitcoin prices against the US dollar and a failure swing on the RSI indicator. The failure swing is defined as a phenomenon where two successively lower peaks are formed by the signal line of the oscillator. The first peak was formed in November 2019 and registered at 71.68 (in overbought territory). Formation of a second peak which is lower than this vertical level, or which fails to reach the overbought level, confirms the failure swing.
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