With the Alonzo hardfork on its way, where is Cardano headed right now
Cardano is currently hours away from its highly anticipated Alonzo hard fork. According to recent announcements, the hard fork is expected to commence on September 12th, Sunday at approximately 21:45 UTC.
A few weeks back, such an update would have played right into ADA’s hand to breach another key milestone in the charts but since the beginning of September, there has been a period of collective correction in the industry.
Now, market speculation is expecting ADA to embark on another bullish leg after the Alonzo hardfork but it might not be as straightforward as it seems.
Typical Supply Zone Recovery?
Now, over the past day, Cardano did experience a massive recovery of 12-13%, which allowed the asset to momentarily reach $2.80. However, the spike can be explained in terms of supply zone dynamics.
As illustrated in the chart above, the price zone between $2.92-$2.80 was extremely vital for the asset before the eventual collapse. After dropping down to $2, the current recovery up to exactly $2.80 can be considered normal according to market structure, as buyers are able to exist at a possible break-even or lower loss position.
Another interesting metric was provided by Santiment from a perspective of FOMO sentiment.
According to data, the rally back towards $2.80 was triggered by momentary FOMO from the market, and historically, such rallies have always led back to a position of lower lows in the charts. Right now, the asset was valued at near $2.60, which can be inferred as bullish momentum currently fading off in the market. Trading volumes have also kept low during the last few hours.
Why the Alonzo hardfork will be a non-event for Cardano?
Tomorrow is the big day! We are entering a new Era of Cardano.
— Charles Hoskinson (@IOHK_Charles) September 12, 2021
Charles Hoskinson’s excitement is palpable at the moment, and rightly so. The Alonzo hardfork is one of the most important upgrades for the ADA network and it will be bringing forward smart contract functionality. Yet, the necessary positive effects will possibly take place over time and it is highly unlikely that the price recovers previous high levels based on the upgrade.
The average transfer value indicates the lack of activity at the moment as well. As identified, the transfer value imploded during the correction which may have seen whales move their profits, however, during the recent spike, the average transfer value continued to dip. This infers to a couple of situations that might have taken place; first, there might be a lack of sellers at the moment, which is a bullish sign, but secondly, it could also mean that outflows are reducing.
For Cardano, right now, the market is touch and go in terms of momentum but investors should not put all their chips in during the weekend, as the price is highly unlikely to react to the hardfork.