The Cardano Vasil update is expected to be a bullish development, but macro concerns are heavily countering the bias.
Cardano (ADA) will undergo a major network upgrade called Vasil on September 22, potentially making its blockchain more scalable and cheaper. However, this news did not generate any decisive upward movement in the ADA market.
Macro factors influence the best ADA growth scenario
Notably, the price of ADA is up about 3.5% to $0.51 since the announcement of Vasil’s launch, including a surge of about 14% followed by its near-destruction. In other words, traders initially bought into the Vasil hype but quickly exited the market as shown in the chart below.
Four-hour ADA/USD price chart. Source: Trade View
Cardano founder Charles Hoskinson, despite Vasil’s euphoria, blamed “macro factors” for ADA’s poor performance, noting that crypto markets in general are “ineffective.” He added:
“Cardano has never been stronger, and to be honest, many other projects in the industry are also reliable, but you don’t see it reflected – just a red sea.”
The statements revealed riskier assets poised for another deep decline in the days leading up to the Sept. 20-21 Federal Open Market Committee (FOMC) meeting.
Markets anticipate that Federal Reserve officials will vote to raise interest rates by a further 0.75% on September 21st. In general, the US Federal Reserve expects to raise interest rates to 3.75-4% by the end of 2022.
Fed scatter chart. Source: Bloomberg.
A high interest rate could hurt Cardano and other top-cap crypto assets as it will likely make cash-based instruments more attractive to investors.
Before the “mini” Cardano?
From a technical standpoint, Cardano appears poised for a mini-rally in the days leading up to the Vasil hard fork.
On the 4-hour chart, ADA price is testing the support confluence for a possible bullish move. This confluence consists of a multi-week uptrend line and a support bar, which is highlighted in the chart below.
Four-hour ADA/USD price chart. Source: Trade View
Let’s say ADA bounces from the merge. Then the immediate upside target for ADA 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 cap since mid-August.
Meanwhile, a break above $0.50 could see the ADA bulls test $0.53 as their key upside target, a level with significant history as resistance. In other words, ADA could make a 15% gain before the Vasil hard fork compared to the September 7 price.
Related: New report ranks Cardano ahead of Bitcoin as world’s top intimate brands
However, the ADA is looking weaker on its longer time frame charts as its three-day performance shows a bearish continuation pattern dubbed the “descending triangle.”
Three-day ADA/USD price chart. Source: Trade View
ADA risks falling to $0.26 if it falls decisively below the lower trendline of its descending triangle, according to technical analysis rules. In other words, a price reduction of almost 40% compared to current prices.
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