Cardano achieved one of the best performances in the crypto market in 2021. The cryptocurrency has reached important milestones and climbed the ladder of the crypto top 10 by market capitalization.
Currently sitting in third position after outperforming DOGE, XRP, BNB, Cardano (ADA), it is trading at USD 2.37 with a 2.1% loss on the daily chart. In the weekly chart, the third crypto according to market capitalization recorded a loss of 5.8%.
ADA moves sideways with critical support. Source: ADAUSDT Tradingview
Analyst Justin Bennet has been closely following ADA’s price action. The cryptocurrency saw a lot of movement in September, with a significant pullback on the 7th, followed by a relatively quick rebound into the high areas of its current levels.
At that point, ADA was standing at around $ 2.70 with support at $ 2.60, $ 2.47, and $ 2.30, respectively. As Cardano continues its downtrend, the final obstacle for the bears is at the latter support level.
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Bennet claims ADA could quickly plummet to $ 2 if that line of defense is lost. The cryptocurrency has recently seen the “intersection of ascending channel support and a horizontal level” since it began its recovery after crashing on the 7th. The analyst said:
I still think there is a good chance ADA will trade at $ 2 this month. However, as I said last week, it will take a daily close below $ 2.30 to confirm the breakdown.
Alternatively, ADA could continue its uptrend when the bulls hit higher levels again. However, Cardano moved below a trendline formed in the past few days, as shown in the chart below, and it seems likely that it could increase its downside risk over the weekend.
Source: Justin Bennet via Twitter
What Bitcoin could signal for Cardano (ADA) in the short term
In the crypto market, most of the assets increased their correlation with Bitcoin as large upward or downward movements occur. Cardano could benefit from this phenomenon as ADA is at a critical point, or it could see itself return to $ 1 levels.
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The next few days could be crucial for the entire crypto market as Bitcoin’s price action could determine whether the bulls or bears are in control. Bennet said:
A weekly close within this range would not be good, but a lack of higher macro highs will do. If we are in a bull market, we should see Bitcoin taking out $ 53,000, $ 65,000, etc. As simple as that.
Conversely, there is a scenario where Bitcoin could make more profits if altcoins like Cardano (ADA) are bleeding. There are more and more rumors about the possible approval of a BTC ETF, this could bring a new inflow of capital to Bitcoin, as analyst Pentoshi said:
I think we’ll see more capital inflow into Bitcoin, especially as ETF talks heat up over the next month. That doesn’t mean that alts won’t have outliers and opportunities. there will of course be. But the word “old season” implies seasonality, which means something that is not all year round.
With that in mind, the analyst recommended that investors keep an eye on Bitcoin’s dominance for risk management. Q4, 2021, approaches and investors seem more uncertain about the direction of the crypto market.
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