ADA formed textbook bullish reversal pattern against Bitcoin since the highs seen in July. The altcoin crashed by a few percent against the number one cryptocurrency as we reported in the Cardano ADA news previously.
Cardano could soon outpace Bitcoin according to a technical indicator which usually predicts reversals in the trend of an asset. ADA formed textbook bullish reversal pattern as it is usually poised to reverse against BTC to the upside according to the Tom Demark Sequential. The TD indicator is a time-based indicator that prints 9 and 13 candles once an asset is poised to find an inflection point in its trend. One analyst noted that ADA is on the verge of “falling off a cliff” pointing to how each of the recent rallies was weaker as evidenced by the declining buying volume:
“Just took a look at a random major $ADA. Notice how each rally is weaker, with a smaller impulse and declining volume. There’s red flags everywhere to me. Yes there’s no confirmation but we really can see some pullbacks deeper than you expect. This looks ready to fall off a cliff.”
This sentiment was echoed by another trader who noted that ADA’s price action looks like it did at the start of 2019 after the parabolic rally. The volatility in the Bitcoin market could suppress the price action of altcoins such as Cardano. Analysts say that when there’s low volatility, Bitcoin has the potential to outperform altcoins as Mohit Sorout of Bitazu Capital said:
“Most (altcoin) cycles in crypto are centered around bitcoin volatility. When it dries up, no one wants to trade btc which becomes evident from the volume as well. This leads to a large uptick in speculation on alts, driving their prices up – typically alts with strong narratives & large scale memetic behavior get the most volumes.”
As recently reported in the ADA News, Cardano’s Shelley mainnet attracted more than 856 stake pool operators in the past week but the retail investors lost the excitement around ADA because of the lackluster price action. If the trend continues, the price of the cryptocurrency could pullback based on the technical metrics. Cardano transitioned to a proof-of-stake after the successful launch of the Shelley upgrade but many crypto enthusiasts showed interest in the staking rewards as different fundamental and technical metrics suggested that ADA is bound for a retracement.
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