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While Cardano ADA targets a 15% rally, Charles Hoskinson is concerned about macro factors

While macro concerns are severely against the positive bias, Cardano's Vasil update is anticipated to become a bullish event.

Photo by Quantitatives / Unsplash

On September 22, Cardano ADA (1) will undergo a significant network update called "Vasil," which could make its blockchain more scalable and affordable. Yet, the news hasn't ignited any clear upward momentum in ADA's market. Since the Vasil (2) statement, the price of ADA has increased by roughly 3.5% to $0.51, including a roughly 14% gain and a nearly flawless wipeout, indicating that traders originally bought the Vasil hype but are also quick to quit the market.

Photo by Michael Förtsch / Unsplash

Despite the Vasil exuberance, Cardano founder Charles Hoskinson (3) blamed macro reasons for ADA's poor performance and observed that crypto markets are detached from reality. While many projects are thriving across the sector, and Cardano is at its strongest point ever, it just shows a sea of red and no reflection.

The statements gave the impression that riskier investments were poised for yet another steep decline in the days before the Federal Open Market Committee's FOMC meeting on September 20–21 (4). The market also expects Federal Reserve policymakers to vote to hike the benchmark interest rate by an additional 0.75% on September 21. Overall, the U.S. central bank wants to raise the rate to 3.75% and 4% by the end of 2022.

Cardano and other top-cap crypto assets may suffer in a high-rate environment, and investors' interest in cash-based instruments is likely to rise. From a technical standpoint, Cardano is about to experience a mini-rally in the days preceding the Vasil hard fork.

A confluence for a probable rebound made off a multi-week ascending trendline and a support bar is also supported by ADA's price tests. ADA's immediate upside goal is approximately $0.50, leveling a point where two resistance levels intersect and a mid-level target that has acted as a price ceiling since mid-August if ADA recovers from the confluence.

However, if $0.50 is broken, ADA bulls may test $0.52 as their main upside objective. A break over $0.52 has a long history of serving as resistance, and a break over it might result in a 15% increase in price before the Vasil hard fork. With a three-day performance indicating the presence of a bearish continuation pattern known as a descending triangle, ADA appears weaker over a longer time frame.

If ADA breaks decisively through its descending triangle's lower trendline and the price declines by nearly 40% based on technical analysis, it could fall as low as $0.26. In more detail, descending triangles develop when the price settles within a range indicated by a falling upper trendline and a horizontal lower trendline. Typically, these triangles resolve when the price breaks below the trendline, which can then cause them to fall as much as their maximum height.

The Cardano hard fork, which will include a significant change to the Plutus script (5) and the programming language used for smart contracts, has been promised to increase scalability and reduce costs. Then, Plutus was introduced in the Alonzo (6) upgrade that occurred in September of the previous year.