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 $ 2.37 with a 2.1% loss on the daily chart. In the weekly chart, the third crypto recorded a loss of 5.8% by market capitalization.
ADA moves sideways with critical support. Source: ADAUSDT Tradingview
Analyst Justin Bennet has followed ADA’s share price closely. 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 this 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 collapse.
Alternatively, ADA could continue its uptrend when the bulls hit higher levels again. However, Cardano moved below a trendline that has formed in the past few days, as the chart below shows, 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 there were large upward or downward movements. Cardano could benefit from this phenomenon as ADA is at a critical point or it could return to the $ 1 level.
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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 take 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. Rumors are mounting about the possible approval of a BTC ETF, which 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 investors to keep an eye on Bitcoin’s dominance for risk management purposes. Q4, 2021, approaches and investors seem more uncertain about the direction of the crypto market.
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