Cardano’s rise during the bitcoin rally was parabolic but unlike the king coin, it wasn’t sustainable. The retracement pushed ADA down by a whopping 35% and since then, the coin has been consolidating.
For now, we can expect ADA to keep continuing its consolidation until it reaches a boiling point. Post which, we can see a breakout that will make or break ADA. Judging by bitcoin’s short term bias, which is bearish, it will be the former, unless we see a drastic drop in bitcoin’s price.
Cardano 4-hour chart
Source: ADAUSD TradingView
The 4-hour chart shows consolidation on ADA’s part, which is forming a symmetrical triangle pattern.
Rationale
The pattern has no definitive bias, however, considering the previous trend, which was a parabolic bullish move, this becomes a bullish continuation pattern. Hence, we can expect ADA to surge after hitting a breakout point. This is the first reason for being bullish on ADA; other reasons include the level at $0.147 is strong support, which has held up so far.
A bounce from this level seems likely and might what ADA needs to break out of the consolidation pattern.
While it is promising to go long on ADA, there are few things to consider, which if it does play out might deter this bullish bias for ADA. The first is the overall ecosystem’s health, and if it is overleveraged, an unwinding might push the price down for all coins.
Bitcoin at press time has blown off some steam considering yesterday’s drop, which caused a 10% drop and millions in liquidation. So, for the extremely short-term, a drop might be not on the menu, however, it can be expected.
Conclusion
Considering Cardano’s growing correlation with bitcoin, it calls to rethink the long position on ADA. This is because the risks of a drop are high especially when bitcoin is trying to surpass its all-time highs.
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