May 20, 2024

Cardano (ADA) Faces Market Pullback, But Bullish Outlook Remains

Cardano (ADA) Down Nearly 10% in Broader Market Pullback

Cardano (ADA) has experienced a decline of nearly 10% on Friday, as the cryptocurrency is caught up in a broader market pullback that has also seen Bitcoin drop below $30,000. ADA is currently trading just above $0.32, down more than 15% from its recent multi-week highs of $0.38. The market volatility has been accompanied by high trading volumes, with ADA recording trading volumes close to $1 billion across major spot exchanges in the last 24 hours, well above normal levels.

ADA’s Near-Term Outlook Confused Amid Market Volatility

The recent volatility in cryptocurrency markets can be attributed, in part, to the US judge ruling that XRP is not a security and that Ripple’s XRP sales through public exchanges did not constitute an investment contract offering. This ruling was perceived as a significant win for the industry and boosted sentiment, leading ADA to surge by 23.5% on the day. However, profit-taking and reports of layoffs at Binance have contributed to ADA’s pullback on Friday. Furthermore, some argue that the judge’s XRP ruling has added to regulatory confusion, as it also stated that Ripple’s institutional XRP sales violated federal securities law. These factors have muddied ADA’s near-term outlook.

ADA Price Prediction Points to Bullish Prospects

Despite the pullback, ADA price predictions remain bullish. While the cryptocurrency may retest its prior pennant structure in the $0.30 area, this could present an opportunity for bullish investors to get involved once again. The recent breakthrough of the $0.35 resistance level reduces its significance as a psychological barrier for future retests. As a result, bulls are likely to target a test of yearly highs above $0.46. The XRP ruling undermines the SEC’s claim that ADA is a security, which may encourage risk-tolerant investors to invest in the token, considering its affordability compared to historical standards. Additionally, capital inflows into Cardano’s decentralized finance (DeFi) ecosystem should act as a tailwind for ADA in the coming weeks and months.