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The relatively weak price performance on Cardano may end soon as the cryptocurrency is coming closer to a breakout from the nine-month-old chart pattern that will most likely fuel a volatility spike.
According to the asset's daily chart, Cardano still remains in a long-term downtrend since September 2021, when ADA reached the current all-time high of $3.1 after the announcement of smart contracts technology. Unfortunately, ADA missed the rally on the cryptocurrency market back in November and struggled to show any kind of positive price performance.
With the gradually decreasing volatility of ADA, we saw the formation of a massive long-term falling wedge pattern, which might become a foundation of a global trend reversal for Cardano.
At press time, Cardano is moving closer to the narrow part of the pattern, which indicates that we will most likely see a breakout in either direction quite soon. Unfortunately, there is no proper way of determining the direction of a breakout since it is affected by a variety of independent factors.
Fundamentals are following
The most recent rally on Cardano was fueled by the fundamental growth of the network, which attracted millions of users' funds after the release of the first decentralized applications.
Because of the outflow of funds from the DeFi industry, Cardano-based applications lost a major part of their TVL, causing a slight crisis in the ecosystem. But despite that fact, Cardano developers are getting ready for a summer rich with new decentralized solutions and application releases.
At press time, ADA trades at $0.5 and has lost over 5% of its value in the last 24 hours following a modest correction on the cryptocurrency market.
Vladislav Sopov