Bitcoin’s Dead Act Sets Rival Cardano Towards Its 15-Month High
- As Bitcoin sails on calm waters, its rival Cardano is up more than 36 percent already in the third quarter.
- Traders looking to diversify from the top yet flat cryptocurrency could pump Cardano further into July.
- The upside sentiment takes cues from the altcoin’s upgrade to proof-of-stake at the end of this month.
When bitcoin traders get bored, they pump altcoins.
So it appears in the last week’s price action across the alternative cryptocurrency universe. As Bitcoin trends inside a 0-1 percent trading range, its top blockchain rivals, including Ethereum, XRP, Bitcoin Cash, Chainlink, and others, have surged higher.
But the most notable performed in the top-10 crypto index is Cardano. The sixth-largest blockchain project’s market cap has surged by more than 36 percent entering the third quarter. Meanwhile, its native token ADA has also posted a similar parabolic move to the upside.
Cardano's ADA in parabolic upside rally since its March 2020 low. Source: TradingView.com
The Get-Rich Cardano Pump
It is safe to assume that a lot of speculation is rising on Cardano. The project did not do well enough after crashing by over 95 percent from its January 25 all-time high. The first version of its mainnet launch featured token transfers on a federated blockchain – nothing new about that.
But the narrative started shifting entering 2020. IOHK, the core development team that backs Cardano, deployed the code for the project’s second upgrade, called “Shelley.” It will get activated by the end of July – and with it will come Cardano’s long-awaited proof-of-Stake (PoS) protocol featuring staking rewards.
Is this an entry? I don’t believe so. Is this a short entry? I don’t believe so, either.
Uptrends -> buy the dip strategy. pic.twitter.com/20ec5u3sEj
— Crypto Michaël (@CryptoMichNL) July 8, 2020
Now all of what is said above is a promise. Cardano has neither confirmed a successful hard fork nor has proven that it is a better PoS project than its top rivals Tezos and Chainlink. Moreover, the Ethereum’s switch from proof-of-work to proof-of-stake next year is also going to increase the competition.
But the announcement appears bullish to the crypto land. It is enough for traders to leave aside their Bitcoin holdings for a while and hedge into Cardano’s ADA to “buy the hype.” As a result, the ADA/BTC exchange rate stands 55 percent higher month-to-date.
More Room to Grow
Wilson Withiom of data aggregator service Messari explained the hype in a note published last week. The research analyst credited the term “staking rewards” as the primary catalyst behind ADA’s rally (in both the US dollar and bitcoin-enabled markets). Excerpts:
“Prospective stakers scooping up ADA and those speculating on the allure of staking rewards have likely driven this upward trend […] Staking is more lucrative early on since participants experience a diminishing return as more stakers join the network.”
Mr. Withiom, meanwhile, added that the Cardano token has “plenty of room for growth.”
That leaves ADA under the spell of magnetizing upside targets, starting with the nearest ones at 1,613 sats, followed by 1,944 sats and beyond. The levels have been taken from a Fibonacci retracement graph drawn from ADA’s April 3, 2019’s top to January 14, 2020’s bottom.
ADA upside targets plotted on a Fibonacci retracement graph. Source: TradingView.com
Therefore, as long as Bitcoin remains unattractive, boring, and stable, traders may keep cashing on the hypes created by neighboring tokens. Meanwhile, a breakout move in the top cryptocurrency could prompt altcoins, including ADA, to pare part of their recent gains.
The ADA/BTC has hit its 15-month high, anyway.