Cardano Price Prediction: Is ADA Ripe for a Breakout to $0.46?

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Cardano price is in the green today as demand for the currency continues to rise. The ADA price is trading at $0.410, which is a few pips below yesterday’s high of $0.4290. Its market capitalisation has jumped to more than $12.4 billion, making it the 6th biggest digital currency in the world.

Cardano news: There’s no major news moving the Cardano price higher. This week, it was revealed that Grayscale Investments had decided to file for a Cardano trust. It will also form another trust for Monero, Cosmos, and EOS in addition to its other well-known trusts of Ethereum and Bitcoin. In theory, this will lead to more demand for Cardano and other currencies.

Another major Cardano news is that the company behind it plans to create its own stablecoin.

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Cardano price prediction

Last week, I wrote that the ADA price was ripe for a bullish breakout. I pointed to the bullish pennant that started to form in January. This prediction was correct as the price broke-out to its all-time high of $0.4322.

Looking at the same chart, we see that it has found some resistance. This is expected since the price is at its ATH. Still, there is still a possibility that the price will have a bullish breakout as bulls start targeting the next vital resistance at $0.4500. However, this prediction will be invalidated if it moves back to $0.3500.

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ADA price chart

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Grayscale Investments, a subsidiary of Barry Silbert’s VC company, the Digital Currency Group, has added six new trusts, which includes those associated or linked to Polkadot (DOT) and Aave (AAVE) digital tokens.

The other new trusts added by Grayscale include Monero (XMR), Cardano (ADA), Cosmos (ATOM), and EOS.IO (EOS). All of these news trusts were announced on Wednesday (January 24, 2021) by the Delaware Trust Company, which is Grayscale’s “statutory trustee.”

These new trusts have been launched shortly after Grayscale had incorporated six other trusts which include those linked to Chainlink (LINK) and Tezos (XTZ) crypto tokens.

Michael Sonnenshein, CEO at Grayscale, has clarified that these new trusts don’t mean or imply that the company will be offering these products.

Sonnshein has previously noted that Grayscale is always looking for potential opportunities to provide digital asset products that meet client requirements. There are times, however, when Grayscale will submit reservation filings, but a filing doesn’t necessarily mean the company will bring a new product to market, Sonnshein explained. Grayscale plans to continue to introduce other products that meet investor demand, Sonnenshein had confirmed.

Grayscale Investments is the world’s largest digital asset management firm. The company manages over $24 billion in assets across its diverse line of products. Grayscale’s Bitcoin (BTC) product remains the company’s most popular product with over $20 billion in AUM.

Grayscale has made substantial progress with its primary trusts, which include other major crypto-assets such as Ethereum (ETH), Litecoin (LTC), and previously XRP (before the SEC lawsuit after which Grayscale ended support for the digital asset). Grayscale’s investment products help investors maintain “auditable ownership of their cryptocurrencies through a traditional investment vehicle.” These assets are also maintained offline (or in cold storage wallets) for protection (from hacks or other cyberattacks).

Grayscale had recently frozen most of its large-cap trusts, which came due to a mandatory lockup period. The company confirmed that it has now initiated the reopening process. Grayscale announced that investors will again be able to acquire units of its Ethereum Trust.

Grayscales Ethereum Trust, which currently holds $4 billion worth of ETH, acts like any of the company’s other trusts. Grayscale works with a group of private investors and uses their funds to make investments in digital currency. Grayscale charges these investors 2% and then sells their shares in the Trusts via public trading platforms.

These so-called Trusts promise investors “auditable ownership [of crypto] through a traditional investment vehicle,” but they also keep cryptocurrencies illiquid and offline in cold storage wallets for security.

This usually makes Trusts a lot more costly than publicly-traded crypto-assets like a Bitcoin exchange-traded-fund (ETF). But applications for crypto-related ETFs via US exchanges have been rejected on many occasions by the US Securities and Exchange Commission (SEC).

Over the years, Grayscale has managed to build a strong presence in the digital assets sector. The company is the blockchain or DLT sector’s largest institutional investor and asset manager with nearly $25 billion in AUM as of January 2021.

Grayscale has also registered other major altcoin trusts with Delaware’s corporate registry, suggesting that it may be planning to accommodate investors’ rising interest in seemingly promising altcoin projects like Cardano, EOS, and Uniswap.

This seemingly positive news has not really led to the highly-anticipated altcoin market pump.

It now also appears that Grayscale might have some competition with BlockFi being the latest company to go up against Grayscale’s Bitcoin (BTC) Trust.

BlockFi, which serves as a hub for crypto-based lending, seems to be increasingly focused on institutional Bitcoin bets via a new Bitcoin trust product.

The new trust, announced on Friday (January 29, 2021) regulatory filings, might put BlockFi in competition with Grayscale for Bitcoin-focused Wall Street investors. Grayscale’s BTC trust is among the world’s single-largest Bitcoin investment vehicles currently available.

The BlockFi Bitcoin Trust has not yet acquired any funding from potential investors, according to a filing submitted to the US SEC. Key factors or characteristics about the BTC fund’s structure aren’t available. But the fund’s status as a Rule 506(c) exempt offering will allow BlockFi to market this trust publicly.

BlockFi has also announced the launch of its Over-The-Counter (OTC) trading desk for institutional and ultra-high net worth (UHNW) clients (with a net worth of $30 million or more) across the globe.

BlockFi confirmed:

“Dedicated traders on BlockFi’s OTC desk will be located in the U.S. and Asia, providing global, 24/7 support to clients active in digital asset markets. With the rollout of comprehensive OTC capabilities, BlockFi will act as an execution partner, offering spot trading, credit capabilities and a margin trading product. The desk will support large-cap cryptocurrencies such as bitcoin, ether, litecoin, as well as other coins based on demand and availability on BlockFi’s platform.”

(Note: for more information on this announcement, check here.)

Cardano Price Analysis: ADA looks primed for a 30% move

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Cardano price is bound for high volatility following a long consolidation period.

The bulls seem to be targeting $0.45 while the bears aim for $0.20.

On-chain metrics hint at a stiff supply barrier at $0.35, which seems to favor the bearish outlook.

Cardano price saw a meteoric surge of 200% from late-December 2020 to mid-January 2021. However, the smart contracts token has been stagnant over the past two weeks showing an ambiguous outlook. A potential breakout could see ADA move by roughly 30% in either direction, but on-chain indicators skew with the bears.

Cardano price sits at a make-or-break point

ADA’s consolidation phase is nearing completion as its price trades around the $0.35 level. But, a symmetrical triangle formation indicates that the breakout could happen in either direction.

Since Cardano has not experienced a significant retracement after it entered a 300% bull rally in the last two months, it is reasonable to assume that it sits in overbought territory.

ADA/USD 12-hour chart

The bearish thesis holds when looking at IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model. This on-chain metric shows a massive concentration of underwater investors at $0.354 who are more than likely to sell their holdings to break-even.

Cardano IOMAP

A spike in sell orders that pushes Cardano price below the 50 twelve-hour EMA will likely validate the bearish outlook. The downswing could be followed by further downward pressure sending ADA towards the $0.27 level where the SuperTrend indicator and the 100 twelve-hour EMA converge.

It would be extremely bearish for ADA price to breach this confluence, as it would cause it to drop towards the 200 twelve-hour EMA around the $0.20 level.

Nonetheless, Cardano could avoid further losses if its price heads higher and breaches the critical supply barrier at $0.354, and closes above $0.38. If this were to happen, ADA price will rise by 30% and target $0.47.