Cardano Supporters Appear to Be Getting a Bit Desperate

Recently, FXstreet published an article noting that the Cardano (CCC:ADA-USD) could be ready to retest the $2.50 level, in part due to rising scale of adoption.

The Cardano (ADA) token with other gold and silver tokens in the background.
Source: Shutterstock

It’s an intriguing concept, to be sure. However, with the fickle nature of cryptocurrencies, it’s not a slam-dunk thesis.

Still, Cardano founder Charles Hoskinson believes that despite recent troubles in the crypto sector, ADA could once again regain lost momentum. In a recent blog post, he mentioned that Cardano-driven blockchain applications will be “as ubiquitous as the internet and be used by billions in the future.”

Further, Hoskinson asserts that blockchain technologies are making progress toward mass adoption. Specifically for Cardano, the “scale of adoption will take years to decades, not weeks to months, and won’t be a meme.”

Frankly, I appreciate what he’s saying in that Cardano represents a slow burn as opposed to a firecracker of an asset; hot one day, fizzling out the next. However, one of the contentions now is that the meme-trade phenomenon, as odious as it may be to traditionalists, helps keep certain coins and tokens in the news above others.

Now, I’m not suggesting that Hoskinson is wrong to ascribe patience as a virtue in the crypto space. Honestly, I don’t know how the market will value Cardano. But it’s also fair to point out that many newbie investors jumped into this arena because of the promise of quick riches. So, if you’re talking about years to decades regarding adoption, that doesn’t align with the current ethos of crypto buyers.

You really need to be talking about days, maybe even hours.

Still, Hoskinson’s (noble) efforts to turn bad news into good is no match for what I saw next on FXstreet’s article.

Bearish Patterns to Support Cardano?

Naturally, I understand the concept that if you’re vested in a particular crypto project, you’re going to view the coin in a different lens than others. I also get it from a more personal level since I own some Cardano coins, although I’ve been limiting my exposure, as I’ve disclosed in prior InvestorPlace articles.

However, I’m also a realist, which often puts me at odds with diehard fans. So be it. I have to call a spade a spade. So it’s interesting what one crypto analyst, who goes by the name Ezy Bitcoin, stated about ADA.

In a tweet, he stated that Cardano appears to be forming a head-and-shoulders pattern, which Ezy interprets as bullish. As well, the author of the article, Ekta Mourya, also came away with the same interpretation. “The analyst believes that Cardano price trend is forming a head-and-shoulders pattern, which is considered bullish for the altcoin.”

First of all, let me be fair. I’m not sure if there were additional posts from Ezy adding more nuance or context to the Cardano statement. What I can tell is that the analyst has posted bullish narratives for other competing cryptos. Therefore, it’s my speculation – something I could be wrong about – that Ezy may be fitting ADA into a narrative for consistency’s sake.

If that’s true – and again, it’s just my speculation based on the available evidence – such an analysis seems a bit desperate, not as a pejorative but as a stretch to establish connections that just aren’t there. I’m sorry, but anyone who has a basic understanding of technical analysis knows that head and shoulders imply negative future price action.

Just look at the chart for Dogecoin (CCC:DOGE-USD) between April through June of this year. A head-and-shoulder pattern developed, reversing the extreme optimism.

Bad News is Not Necessarily Good News

Sometimes, bad news is genuinely good news for cryptos or other risk-on assets. For instance, if the Federal Reserve views the economy as struggling, it may decide to inject stimulus, which would create an inflationary tailwind (all other things being equal) for popular growth ideas.

However, in this case, the efforts to turn lemons into lemonade if that’s really what’s going on feature a credibility problem. Even more, you should be careful if Cardano proponents are calling obviously bearish signals as encouraging bullish indicators.

Interestingly, compared to multiple top cryptos, Cardano features some of the more worrying dynamics, such as its price being below both its 50- and 200-day moving averages. As wonderful as its underlying blockchain is, investors should exercise supreme caution with ADA.

On the date of publication, Josh Enomoto held a LONG position in ADA and DOGE. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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