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Cardano (ADA), Polkadot (DOT) Might Be High-Risk Altcoin Play Now: Analyst

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Wed, 13/09/2023 - 13:00
Cardano (ADA), Polkadot (DOT) Might Be High-Risk Altcoin Play Now: Analyst
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Cardano (ADA) and Polkadot (DOT) are grabbing attention, but not necessarily for the right reasons. The Glassnode cofounder's recent analysis suggests that these altcoins could be a risky play in the short term. The strategy? Short these alts as Bitcoin nears resistance and goes long when BTC is near support. If these coins spike, consider shorting post-spike.

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Over the past month, Cardano's price has been oscillating between $0.25 and $0.29, with no significant upward momentum. Polkadot has not fared much better; its price has ranged from $4.25 to $5.07. The lack of a strong upward trend makes these altcoins susceptible to market volatility, especially when Bitcoin is struggling.

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Source: TradingView

In the short term, both ADA and DOT have shown a lack of bullish signals. ADA's price has been mostly stagnant, hovering around the $0.25-$0.29 range. DOT's price has been equally uninspiring, fluctuating between $4.25 and $5.07. The midterm outlook is not rosy either. With Bitcoin's resistance levels acting as a market barrier, these altcoins are not the best candidates for a bullish breakout.

The Glassnode cofounder advises looking for alts that have outperformed and shorting them as Bitcoin nears resistance. In the case of ADA and DOT, the lack of strong performance makes them prime candidates for this strategy. If these coins do experience a sudden spike, the recommendation is to short them post-spike, capitalizing on the likely retracement.

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One of the key factors to consider is liquidity. A lack of it can exacerbate price swings, making these altcoins even riskier. With the market still heavily shorted, the absence of sufficient liquidity could lead to sharp declines.

While ADA and DOT have their merits, current market conditions make them a high-risk play. The strategy of shorting these alts near Bitcoin's resistance levels and going long near support levels could be a way to navigate through this uncertainty. But tread carefully; the market is as unpredictable as ever.

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