Cardano managed to enter the top 5 cryptocurrencies by market cap and take the number 4 position, not including USDT. The cryptocurrency has seen important appreciation in 24 hours (5%) and during the past week (25%) following an explosion in its ecosystem.

Related Reading | Cardano’s Ecosystem Explodes, Why ADA Could Be Quick To Resume Bullish Trend

As of press time, ADA trades at $1.47 as it bounces up its lows in the 4-hour chart.

Cardano was heavily impacted by recent months price action in the crypto market. After reaching an all-time high north of $2,20, the cryptocurrency lagged and dipped back into its critical support zone just above $1.

Economist Michaël van de Poppe believes ADA has begun an upward trend after bouncing back from the lows with continuation but could yet present a buying opportunity. The analyst has been bullish on ADA for a while and believes $1 will remain critical support.

As seen below, Cardano (ADA) has constantly bounce back from these levels on every major dropped including March and July 2021 when the entire crypto market saw a crash of over 50%.

At the moment, ADA’s price approaches resistance near $1.53 and could yet give traders an opportunity to take a long position. Van de Poppe claimed the following on Cardano’s potential future price action:

If you want to get into Cardano and you didn’t really get the chance you were looking for (…). In that case, we are looking at long entries at the lower boundaries so around $1.3. We are looking at support here on a daily timeframe.

On lower timeframes, van de Poppe believes traders shouldn’t be chasing positions, but $1.41 could provide an “aggressive” opportunity to take a long. In that sense, Cardano must break above $1.55 to continue its bullish momentum.

Cardano Experiences Ecosystem Explosion

Even if ADA manages to break above the aforementioned resistance, the price could form a consolidation zone above those levels which could present a more efficient opportunity to take a long position. Should Cardano sustain those levels, its price could start targeting former highs at around $2 and $2.33.

Although Cardano has been trading with more strength than some of the other cryptocurrencies in the market, Bitcoin must maintain its current levels or trend upside to prevent ADA for re-testing its support levels. At the moment, Bitcoin seems to be leaning for more downside for the short term.

ADA’s recent bullish price action seems to have been driven due to a growth in the number of projects building on the network. As NewsBTC reported a week ago, there are currently over 200 projects leveraging the network smart contract capabilities.

Related Reading | Cardano Set To Enter The Babbage Era After Alonzo HFC Milestone

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Cardano (ADA) experienced a major downtrend in the past months as the crypto market took another swing for the lows. The sixth cryptocurrency by market cap has seen a year in the green as it managed to complete several upgrades on its mainnet.

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First, Cardano successfully transitioned to a Proof-of-Stake consensus in 2020, shortly after the D parameter reached “0” signaling the full decentralization of block production. The network went from a federate consensus to a community-based consensus as the latter control most stake pools producing blocks on the network.

Later, the start of a new era with the first of 3 major Hard Fork Combinator (HFC) events with the implementation of “Allegra”, followed by “Mary”. These upgrades brought new capabilities to the Cardano mainnet which were completed with “Alonzo” that introduced smart contract capabilities into the blockchain.

This ecosystem has already seen a surge in projects, as developers and users rush in to build and leverage the benefits of its UTXO model. In that sense, community member ADA Whale shared his top predictions that could boost another rally for the underlying cryptocurrency of the Cardano network.

1/Ten Cardano predictions for 2022. They’re imo simultaneously conservative, achievable yet ambitious

In a year I will review how right or wrong I have been. Not expecting full accuracy but maybe 50-75%?

Note: no price talk, if the following happens, price will follow naturally

— ADA whale (@cardano_whale) December 30, 2021

ADA Whale mentioned the potential increase in the number of transactions and active addresses for Cardano. The investor believes these fundamentals could increase by a factor of 5 leading into a massive wave of adoption in 2023.

Cardano remains one of the most actively used networks. Scaling happens via different streams, first gradually to keep up w growth, exponentially in 2023.

This new wave of adoption for this network could translate into more projects. The investors estimated that by the end of 2022, there could be more than 250 decentralized applications, DeFi platforms, launchpad and more on the network. The investor added:

Cardano DeFi starts slowly but TVL >$10bn eoy. Dapp store with levels of certification goes live. Ease of use sees people replace banking stack with Cardano DeFi. Digital Identity projects thrive connecting DeFi w/ real world. UTXO DeFi will be different, and better

Cardano And Its Potential For The Coming Years

In addition to its security, according to ADA Whale, Cardano offers low fees, energy efficiency with a green footprint, and has been adopted by companies and projects with a global impact. This includes World Mobile, Singularity, and others.

The aforementioned collaborations place the ecosystem in different sectors with close deals with governments in growing economies. Cardano will strengthen its partnerships in the coming years as it attempts to provide people with an open, decentralized, and accessible network to manage and support a variety of basic services.

In the meantime, the network develops interoperable capabilities. ADA Whale mentioned Milkomeda, a second layer solution for Cardano with EVM compatibility. This types of solutions will help onboard more users and developers.

Related Reading | Cardano Project Flickto Surpasses 1.5 Million ADA Staked One Month After Launch

As of press time, ADA trades at $1,36 with sideways movement in the past day.

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Cardano has had one of the best performances in the crypto market during 2021. The cryptocurrency scored major milestones and climbed its way up the ladder of the crypto top 10 by market cap.

Currently sitting at the third position, after surpassing DOGE, XRP, BNB, Cardano (ADA) trades at $2,37 with a 2.1% loss in the daily chart. In the weekly chart, the third crypto by market cap records a 5.8% loss.

Analyst Justin Bennet has been closely following ADA’s price action. The cryptocurrency has seen a lot of movement during September with a significant pullback on the 7^th, followed by a relatively quick recovery into the high area of its current levels.

At that moment, ADA stood at around $2.70 with support at $2.60, $2.47, and $2.30. As Cardano continues its downtrend, the final obstacle for the bears stands at the latter support mark.

Related Reading | Cardano Sees Over 40,000 Smart Contracts Deployed 4 Days After Alonzo HFC, How This Affects The Price

Bennet claims that if this line of defense is lost, ADA could rapidly drop to $2. The cryptocurrency recently saw the “intersection of ascending channel support and a horizontal level” since it started its recovery after the crash on the 7^th. The analyst said:

I still think there’s a good chance we see ADA trade to $2 this month. However, as I’ve said for the last week, it’s going to take a daily close below $2.30 to confirm the breakdown.

Alternatively, if the bulls retake higher levels, ADA could resume its upward trend. However, Cardano has been moving below a trend line formed in the past days, as indicated by the chart below, and seems likely that it could increase its downside risk during the weekend.

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 big moves to the upside or downside occur. Cardano could benefit from this phenomenon, as ADA sits at a critical point, or it could see itself returned to the $1 levels.

Related Reading | Cardano Successfully Deploys Alonzo HFC, But Why Is Price Down?

The next days could be crucial for the entire crypto market, as Bitcoin’s price action could determine if the bulls or bears are in control. Bennet said:

A weekly close back inside that range wouldn’t be good, but a lack of macro higher highs is enough. If we’re in a bull market, we should see Bitcoin take out $53k, $65k, etc. Simple as that.

Conversely, there is one scenario where Bitcoin could see more gains as altcoins like Cardano (ADA) bleed. There has been growing rumors about the possible approval of a BTC ETF, this could give Bitcoin a fresh inflow of capital flow, as analyst Pentoshi said:

I do think we will see more capital inflow into Bitcoin especially as ETF talks heat up over the next month. It doesn’t mean there won’t be outliers and opportunities in alts. of course, there will be. But the word itself “Alt season” implies seasonality which means something that isn’t year round.

In that sense, the analyst recommended investors keep track of the Bitcoin dominance for risk management. Q4, 2021, approaches and investors seem to feel more uncertain about the direction of the crypto market.

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