The Cardano Vasil update is expected to be an upbeat development, but macro concerns are strongly counteracting the bullish bias.
On September 22, Cardano (ADA) will undergo a major network upgrade called “Vasil”, which will potentially make its blockchain more scalable and cheaper. However, this news did not generate significant bullish momentum in the ADA market.
Macro Factors Influence Best ADA Growth Scenario
In particular, since the announcement of the launch of Vasil, the price of ADA has risen about 3.5% to $0.51, including a rise of about 14% followed by an almost complete disappearance. In other words, traders initially bought into Vasil’s ad but quickly exited the market, as shown in the chart below.
Four-hour ADA/USD price chart. Source: Trading View
Cardano founder Charles Hoskinson blamed “macro factors” for the poor performance of ADA, despite Vasil’s euphoria, noting that crypto markets in general are “out of touch with reality.” He added:
“Cardano has never been this strong, and to be honest, many other projects in the industry are also reliable, but you don’t see it – just a red sea.”
The announcements looked like riskier assets poised for another deep fall in the days leading up to the September 20-21 meeting of the Federal Open Market Committee (FOMC).
Markets expect Federal Reserve officials to vote on September 21 to raise the interest rate by another 0.75%. In general, the US Federal Reserve intends to raise interest rates to 3.75-4% by the end of 2022.
Fed scatter chart. Source: Bloomberg.
A high-yield environment could hurt Cardano and other top-cap crypto assets as it will likely increase the appeal of cash-based instruments to investors.
Is a “mini” Cardano rally inevitable?
From a technical standpoint, Cardano appears to be ready for a mini-rally in the days leading up to the Vasil hard fork.
On the 4-hour chart, ADA price is testing a confluence of support for a potential recovery move. This confluence consists of a multi-week up trend line and a support bar, which is highlighted in the chart below.
Four-hour ADA/USD price chart. Source: Trading View
Let’s say ADA bounces off the merge. Then the immediate target for the ADA increase is around $0.50. This level is the meeting point of two resistance levels: the “multi-week downtrend line” and the “mid-level target”, which has been the price limit since mid-August.
Meanwhile, a break above $0.50 could see ADA bulls testing $0.53 as their main upside target, a level with significant history as resistance. In other words, ADA could make a profit of 15% compared to the price on September 7th before the Vasil hard fork.
Related: Cardano outperforms Bitcoin in the world’s top intimate brands in new report
However, the ADA looks weaker on its long-term charts as its three-day trend shows a bearish continuation pattern, dubbed the “descending triangle.”
Three-day ADA/USD chart. Source: Trading View
ADA risks falling to $0.26 if it breaks decisively below the lower trendline of its descending triangle, in accordance with technical analysis rules. In other words, a price drop of almost 40% from current prices.
The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.
