Cardano (ADA) has become a huge player in the crypto ecosystem this year. The crypto currently ranks fifth by market capitalization, slightly below Binance Coin and Tether. While it was not immune to the market crash two days ago, it has shown signs of a faster recovery than its peers, with its brief overnight rally almost reaching $ 2 again. Its technical indicators show that there is an uptrend on the charts, but analysts are concerned that if it does not break above $ 2 soon, it will return to its support level of $ 1.4.
At press time, ADA is trading at $ 1.50, a 10% drop over the past 24 hours. However, this hardly tells the story. In that time, the crypto has seen an unsustained rally that nearly pushed it past $ 2, a level it was trading at before the general market crash on Wednesday. ADA soared to $ 1.94 overnight from $ 1.67. The cryptocurrency was unable to overcome resistance, and shortly after, it lost the gains to rest once again at the $ 1.5 level.
On May 19, when the broader crypto market lost as much as 30% of its value, ADA sank to below $ 1, falling below the 50-day simple moving average for the first time in a few weeks. Fortunately, the buyers of the fall were on hand, and their purchases sent the price up almost immediately to more than $ 1.56.
What's Next for Cardano (ADA)?
The cryptocurrency is still on a descending trend line since it peaked on May 16. Analysts believe it is critical for ADA to stay above this line in the near term to justify its recent rally to $ 1.94. If it falls below this line, the rise will prove to have been nothing more than a relief rally and could indicate a pullback to an even lower support level.
For now, the key level to watch out for is the $ 1.63 support level, analysts say. If the market can sustain the buying pressure it is currently seeing for ADA, the cryptocurrency is likely to pull back towards the $ 2 level in the near term. However, if the bears take control, the cryptocurrency is likely to drop to its lowest support level, which sits at $ 1.4.