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Saturday, June 25, 2022

Why is Cardano (ADA) Sliding Lower Today?

Cardano (ADA) is experiencing quite the dip in early trading on Tuesday, losing some of its sheen as investors turn their attention towards altcoins that are posting strong rallies lately. At the time of writing, ADA/USD is trading at around $2.62.

As the date for the Alonzo upgrade nears, IOHK – the firm behind Cardano’s development has confirmed that around 64% of the pools in the blockchain have already upgraded to the latest Alonzo node. The firm is trying to rally the community towards reaching a target of over 80% by the time of the hard fork scheduled to occur on September 12.

With less than a week to go for the major upgrade, critics have also increased their activity, calling out Cardano for a possible FUD in its smart contract system which allows only one agent to interact with a smart contract at a time, potentially creating a concurrency bottleneck. However, IOHK’s developers have played down the issue and defended the model in use stating that it offers higher levels of security and predictability in fees in addition to offering more powerful parallelization capabilities within the blockchain.

The issue under discussion pertains to the eUTxO system employed by Cardano which critics say will limit the speed of the blockchain to processing one transaction per block. The team of developers clarify, “And to be clear, dapps are NOT limited to 1 transaction per block. By designing your service or application with multiple UTxOs, you can enforce more parallelism. This is inherent and – we believe – one of the advantages to eUTxO design as we have implemented it in #Plutus.“

Key Levels to Watch

Technical analysis of the 4-hour price chart of ADA/USD signals a bearish bias among most of the moving averages as well as leading technical indicators MACD and momentum. However, the 200 EMA and the 200 SMA suggest some buying interest too.

ADA/USD

Cardano’s price has fallen sharply under the pivot point at $2.90 and broken through the support at $2.71 as well. Further selling pressure can drive ADA lower towards testing the second support which sits at $2.51, so keep a close eye on this level.

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