- Cardano (ADA-USD) has long been one of the most worrying cryptos.
- The recent jump higher from the $1 level is very encouraging.
- It’s still volatile but ADA looks much more interesting today.
Over the last several months, I’ve been cautious about cryptocurrencies and for good reason. A kaleidoscope of pain, from overexuberance to fears of sharp interest rate hikes to inflation worries to the war in Ukraine has kept many investors on the sidelines, particularly with alternative cryptocurrencies like Cardano. Wildly volatile even compared to its peers, ADA may have finally turned a corner.
To be completely fair, up until recently, not too many popular cryptos demonstrated encouraging signs of life. For instance, during the weeks of violence in eastern Europe, several benchmark digital assets traded below important technical and psychological levels. But Cardano was one of the worst offenders, consistently testing investors’ nerves.
Since late September of last year, ADA rarely poked its head above its 50-day moving average, a common barometer of nearer-term market health. Instead, the 50 DMA acted as a consistent upside resistance barrier, seemingly driving Cardano into the abyss. Thus, while other cryptos did not present a picture of confidence, ADA was on life support.
Thankfully for supporters, though, its condition appears to have stabilized.
Cardano Is Finally Out of the Sub-Dollar Menu
Throughout my coverage of ADA over the last few months, I warned readers about certain technical thresholds that Cardano could not breach lest it invite bearish attention. The problem that I saw with the coin is that these thresholds kept dropping lower and lower.
However, the $1 level was the critical one. Mathematically and psychologically, $1 represents a clear demarcation. Stay above it and you maintain at least an aura of substance. But as soon as you dip below a buck — even if it’s 99 cents — it raises eyebrows, especially if you were earlier trading hands at $2 or $3.
So, when Cardano slipped into literal penny-stock territory, I did not have an optimistic outlook. That’s saying something considering that I own some ADA coins. Despite my bias, I couldn’t overlook the probability of serious damage should ADA not maintain its $1 (or above) price point.
Still, Cardano received a lifeline as many other cryptos bounced higher over the last weekend of March. Contributing to the optimism was a credibility boost from sanction-hit Russia. Late last week, a Russian energy official implied that countries friendly to Moscow could receive oil in exchange for cryptocurrencies.
Such an endorsement of the powers of decentralized currencies (no matter how cynical) provided downwind benefits to digital assets like Cardano.
Now the Real Work Begins
Russia’s announcement wasn’t the only news item breaking the internet. As you may have heard, there was a bit of a situation during the Oscars award ceremony. Long story short, an escalation occurred and the person responsible for it ended up apologizing for his actions. Similarly, Cardano needs an image rehabilitation too.
While ADA may be trading above a buck at time of writing, it actually needs to be trading much higher to help bring back investors that have lost faith in the coin. Truth be told, ADA’s overall posture is slanted negatively, requiring multiple positive sessions to convince onlookers that this is no mere head fake.
Even then, some prospective buyers may be skeptical due to the wild volatility the coin suffered earlier.
ADA Is Interesting But Stay on Guard
I don’t want to dismiss the recent surge in Cardano. Getting above $1 was absolutely crucial because if ADA kept falling while other cryptos were rising, that would likely be the end of it. You probably would have seen a mass exodus.
But I can’t emphasize this enough. You don’t want to celebrate ADA’s rise excessively because this is where the true work begins. Last year, Cardano was mounting a serious challenge for $3 and beyond. We need to see the coin swing closer to that side of the spectrum, not dangerously skim the surface of a critical demarcation point.
On the date of publication, Josh Enomoto held a LONG position in ADA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.