• ADA, the cryptocurrency that powers Cardano’s smart-contract-enabled layer-1 blockchain protocol, is coming under selling pressure on Friday.
• The PCE Price Index report for January revealed a larger-than-expected jump in MoM core inflation to 0.6%.
• This has triggered fears that the Fed might have to raise interest rates higher for longer and weighed down crypto markets.
ADA’s Technical Position
The latest decline of ADA means it is now over 10% below earlier monthly highs in the $0.42s and is back under its 200-Day Moving Average at $0.3815. Cardano is now at a technical crossroads and today’s close will be key: if it breaks below this trend line and its 50DMA just under $0.37, then a drop back to a recent double bottom in the $0.35 area seems likely; but if the crypto bulls regain control and can push ADA to close Friday’s session back above the 200DMA, then a retest of recent highs in the $0.42 area would become more likely.
Outlook For 2023
The Cardano ecosystem will almost certainly continue to grow in 2023, thanks to its large and dedicated community of supporters and developers who continue to launch useful new protocols on the blockchain, including most recently the overcollaterized algorithmic stablecoin Djed. Assuming that cryptocurrency markets continue their gradual recovery from last year’s highly oversold levels, ADA can certainly continue to appreciate. However, with US inflation remaining sticky at elevated levels and no signs of rate cuts from the Fed anytime soon, hitting $3 (near 10x gains from current levels) may be an ambitious target for 2023.
Cryptocurrency markets are heavily influenced by several macroeconomic factors like US inflation reports and Fed rate hikes/cuts which can potentially disrupt price movements across all digital assets including Cardano (ADA). Therefore investors should always keep an eye out for any news or developments related to these topics when investing or trading cryptocurrencies like ADA/USD.
Cardano (ADA) is currently testing an uptrend that has been in play since late 2022 while also keeping an eye out for any macroeconomic developments that could impact both cryptocurrency prices as well as broader financial markets alike. Despite its potential growth in 2023 due to its large community of supporters and developers launching useful new protocols on its blockchain network, reaching $3 (10x gains from current levels) may still prove challenging given US inflation staying sticky at elevated levels with no immediate prospects of Federal Reserve rate cuts anytime soon in sight.