The price of Cardano (ADA) has soared in the past 24 hours as traders assess the impact of Ripple’s legal win on the broader cryptocurrency market.
“ADA isn’t a security”
On July 14, ADA price rose 6% to $0.379, its highest level in over a month, only to pare some of those gains as traders booked profits.
Nonetheless, ADA/USD was up around 20% on a 24-hour timeframe, boosted by the euphoria of Ripple’s legal win against the U.S. Securities and Exchange Commission (SEC).
Notably, a federal judge ruled on July 13 that XRP (XRP) sales on public crypto exchanges complied with U.S. securities laws. The ruling provided fodder for cryptocurrencies — that the SEC had accused of being securities — to defend themselves in court.
Related: XRP ruling a ‘watershed moment,’ but we’re not out of the woods yet — Lawyers
ADA is one of those cryptocurrencies; it fell by as much as 45% in June after the SEC deemed it as security in its lawsuits against crypto exchanges Binance and Coinbase. But now, Cardano’s token has erased almost all of those losses.
If $XRP isn’t a security…$ETH isn’t a security$BNB isn’t a security$ADA isn’t a security$SOL isn’t a security$MATIC isn’t a security$ATOM isn’t a security$FIL isn’t a security$ICP isn’t a securityAnd so on…
Not a legal opinion, just common sense.
— Chris Burniske (@cburniske) July 13, 2023
Cardano whales are napping
However, whales appear to have stood by as ADA price saw double-digit gains in the last 24 hours.
For instance, the number of daily ADA transactions exceeding $100,000 on the network has risen to its highest count since June.
At the same time, the Cardano supply held by the 100,000-100 million ADA balance cohort was flat during the price rally. Meanwhile, the 100 million-1 billion ADA balance cohort (green) rose sharply due to the decline in the 1 billion-infinity ADA token cohort (gray).
In other words, the richest ADA holders may have been selling (or redistributing) their holdings during the price rally.
What’s next for Cardano’s price?
From a technical perspective, ADA price risks entering a consolidation or correction period in the coming days as its big rally left it “overbought.”
Related: Can XRP price hit $1? Watch these levels next
On July 14, ADA’s daily relative strength index (RSI) crossed above 70, the “overbought” threshold.
In addition, ADA/USD tests a multi-month trendline (orange) and the 200-day exponential moving average (200-day EMA; the blue wave) near $0.35 as resistance, which limits its upside potential.
So if the bears manage to pull the price down significantly, ADA price could test $0.32 in July — also its support level from October 2022-November 2022 and January 2023-March 2023.
Additional selloffs can take Cardano down further down to $0.30 in July, down 12.5% from current price levels.
ADA price double bottom?
Conversely, the bulls will argue for their case by zooming out. Notably, ADA price appears to be forming a classic bullish reversal pattern on the weekly candle chart — with a potential price target 150% higher than today’s.
Dubbed the double bottom, the pattern develops when the price forms two local lows in a row followed by a sharp rebound toward a common neckline resistance. The price can rally by as much as the pattern’s maximum height after it breaks above the neckline.
In other words, the Cardano bulls will target $0.45 by the end of 2023 based on such a scenario.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.