The last few days have been critical for the Cardano network courtesy of its Alonzo upgrade which was the highly anticipated improvement scheduled to introduce smart contracts, the vital missing component for the network’s growth.
The Cardano community page on Twitter confirmed that the Alonzo hard fork was rolled out successfully and smart contracts are now active on the mainnet. This is an essential step forward for the blockchain which was previously held back by the lack of smart contract support. However, Cardano’s founder Charles Hoskinson noted that it took longer because they wanted to get it right.
Cardano’s smart contract integration is a turn-key event because it will allow crypto projects to launch their decentralized applications (Dapps) on the network. This will not only allow the network to compete more effectively with Ethereum but also unlock more value for the ADA token. Such value will be unlocked when the network starts onboarding dapps which is enough to encourage heavy investment in ADA but the current price action does not reflect the expected outcome.
Major network upgrades are often considered catalyst events for the involved blockchain’s native cryptocurrency. By that logic, ADA was expected to register significant gains this past weekend with investor FOMO, thus driving up the price. However, that did not happen and the cryptocurrency seems to be on a bearish trajectory. ADA is currently trading at $2.40 after tanking by 8.27% in the last 24 hours at the time of this press and it is down by 17.72% in the last 7 days.
Source: Binance
On the technical side of things, the recent ADA price dip has sent the price below its 7-day and 25-day moving averages, highlighting the strong bearish momentum. This is also reflected by the increased selling volume in the last few days despite the expectations of a bullish performance. Meanwhile, the price has recovered slightly from the oversold zone after the recent dip, but the expected strong recovery failed to take place after the scheduled upgrade.
ADA’s bearish performance in the last few days is largely linked to the BTC selloff that happened on Tuesday due to heavy market manipulation. Bitcoin’s dominance makes it a yardstick through which many investors decide whether to buy or sell their altcoins. It explains why ADA’s price has been declining just as BTC continues its price slide.
In such cases, leveraged positions contribute to the price decline as liquidations cause further selloffs. It explains why the selling pressure is currently outweighing ADA’s buying pressure. It is still not clear whether ADA will continue dropping but that will likely be the case if Bitcoin continues its decline. However, there is also a lot of potential upside as the lower prices become more enticing.
The prevailing uncertainty in the market makes it difficult to predict the next big move. Some analysts are wondering whether the bull market has run out of fuel and whether the current price action marks the start of another downturn. However, even if the market slips some more, heavy buying at discounted prices will likely trigger some upside. Dollar-cost averaging is likely the best strategy to take advantage of long-term price performance.
Sydney has 20+ years commercial experience and has spent the last 10 years working in the online marketing arena and was the CMO for a large FX brokerage.
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