Cardano (ADA) rallied 67%, but then the growth stalled and a correction loomed on the horizon. Will the launch of the Cardano Djed stablecoin help the token?
On January 31, Cardano developers, in accordance with their earlier promises, launched Djed, a super-collateralized algorithmic stablecoin.. This was an important milestone in the development of the Cardano blockchain.
Stablecoin overcollateral will be 400% – 800%. Thus, as the developers explain, “it will have 4-8 times the base value behind it compared to the total amount of issued Djed coins.”
The exchange rate of the coin is pegged to the US dollar, and is supported by ADA and the reserve coin SHEN. If the reserve ratio falls below 400%, the project will stop minting or burning SHEN and minting Djed. If the indicator rises above 800%, SHEN minting will be impossible.
However, the rate of ADA, the native token of the Cardano network, ignored such a significant event for the ecosystem..
Cardano is starting to lose momentum
As the results of technical analysis show, the Cardano rate has increased by 67% since the beginning of 2023. In the process of growth, the price made a bullish breakout of the line of long-term downward resistance and formed a high at $0.400 on January 30.
However, the next day, the price formed a bearish engulfing candle, which is potentially an indication of the completion of the growth.. In addition, the daily RSI has given bearish divergence signals, confirming this decline.
This promises the ADA rate an early decline, during which the market may once again test the horizontal support area of $0.328.
Meanwhile, the main resistance is located at $0.417. Closing the day above it will indicate continued growth and may cause new highs around $0.55.
Source: TradingView Cardano: February will pass without growth?
The 6-hour chart supports the thesis about the continuation of the decline, which is fraught with bearish dynamics of the coin in February.
Cardano completed the formation of a 5-wave bullish structure, in which the fifth wave was represented by the ending diagonal pattern, as evidenced by the shape of the wedge.
A bearish breakdown of the wedge will confirm that our analysis is correct and the price has begun to decline towards the Fibo levels of 0.382-0.5 correction in the area of $0.319-$0.338. This correction could take a fair amount of February, and the bearish break out of the wedge itself could happen as early as the next 24 hours.
On the other hand, a solid close above the wedge will neutralize the bearish outlook. In this case, Cardano may start rising in the direction of $0.55.
Source: Trading View
Thus, the forecast for the ADA exchange rate for February is bearish. A decline to the area of $0.319-$0.338 is likely. A daily close above $0.39 would cancel the bearish scenario and could push up to $0.55.
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