- Cardano bottoms out rallies
- Vasil hard fork fuels cardano demand
- Dollar strength and risk-off mood threat
Cardano is one of the tokens surging even as investors continue to shun riskier investments in favor of bond yields. The move higher is being fuelled by long-term investors using the opportunity to scoop high-profile tokens trading at discounted levels.
ADAUSD technical analysis
However, it is chatter around a proposed Vasil hard fork that seems to have the biggest impact in fuelling the uptrend in the native token that powers the Cardano network. ADAUSD has since powered through the $0.60 resistance level affirming its break-out credentials amid a build-up in buying pressures.
The Relative Strength Index indicator has also turned bullish, powering through the 50 handle, affirming the strong upward momentum. With bulls in control, the next stop looks like the $0.74, a pivotal resistance level.
A rally followed by a daily close above the $0.74 resistance level should affirm the emerging uptrend setting the stage for ADAUSD to make a run for the elusive $1 a coin level. On the flip side, any pull back followed by a daily close below the $0.60 level could attract more short sellers, which could result in Cardano edging lower.
Why is Cardano rallying?
Vasil hard fork
Cardano has turned bullish after months of pounding, shedding more than 60% in market value, on expectations that the Vasil hard fork will result in significant network upgrades. As one of the most established, blockchain the fork is expected to make the Cardano network even more efficient and effective in countering Ethereum on the development of Decentralized applications and powering the Decentralized Finance Ecosystem.
The Vasil hard fork is expected to improve the network in various ways, including enabling improved overall performance and capability. Consequently, the Cardano network should be able to process more transactions faster and handle more volumes of requests. The upgrade is expected to come into play on June 29.
Currently, Cardano is the undisputed Ethereum killer as its blockchain can process more than 250 transactions per second. In contrast, the Ethereum blockchain can only handle 14 transactions a second. In addition, Cardano does not suffer from any congestion issues, a pitfall synonymous with the Ethereum blockchain. Given that the hard fork would make the blockchain much more efficient than Ethereum could explain why the ADA token is rallying higher in the market.
Cardano stands to reap big as many developers and people look for an alternative to the Ethereum blockchain. If Cardano was to surpass the power of Ethereum, its blockchain would be more popular, which could see its use cases increase immensely, conversely triggering strong demand for the native token.
The headwinds
The only headwind standing in the way of ADA token bottoming out after months of pounding would be the risk-off mood theme in the capital markets. Investors have been shunning riskier and speculative assets amid concerns about the global economic outlook. Inflationary pressures have left investors with little money to spend on speculative assets, as was the case at the height of the pandemic.
In addition, a strengthening dollar could also curtail strong Cardano price gain. The dollar strengthening against the majors to multiyear highs has been one factor that has pushed cryptocurrencies lower. In addition, the prospect of higher interest rates has also seen investors shift their attention to bond yields that rally in a high-interest rate environment.
Bottom line
Cardano’s short-term outlook looks bullish ahead of the proposed Vasil hard fork later in the month. Consequently, the coin looks set to continue edging higher as investors use the opportunity to buy the coin at a discount.
