Cardano (ADA) has outperformed the rest of the crypto market with an over 80% rally in 24 hours. However, at press time, Cardano price was erasing some of these gains after dropping from above $1 to trade at $0.97. The volatile price swings stirred by news around ADA being added to the US crypto strategic reserve have caused jitters among traders about whether it will sustain the rally.
In this article, we explore the top reasons why you should not buy Cardano despite the recent gains.
Cardano Price Surges 80%, But Here’s Why You Should Not Buy
Despite Cardano outperforming the rest of the crypto market in the last 24 hours, below are the top 3 reasons why you should not buy ADA yet.
A US Crypto Reserve Still Needs Congressional Approval
As aforementioned, the recent Cardano price rally was fuelled by news around the US altcoin being added into a strategic crypto reserve. However, despite President Donald Trump’s executive order, this crypto reserve faces key hurdles.
BitMEX co-founder Arthur Hayes noted that President Trump would still need Congressional approval to borrow money to buy the digital assets that will be part of the reserve. He stated,
“Nothing new here. Just words. Let me know when they get congressional approval to borrow money and or revalue the gold price higher. Without that, they have no money to buy Bitcoin and shitcoins.”
Analyst Ali Charts also identified these challenges saying Congress had to pass the necessary legislation. Moreover, financial regulatory agencies had to establish compliance rules. According to the analyst,
“Even if President Trump signs an executive order, a US Strategic Crypto Reserve wouldn’t become a reality overnight… And if Congress rejects it, is the entire market pump going to be undone?”
If Congress challenges Trump’s executive order on a crypto reserve and it fails to pass, Cardano price could dump due to a brutal selloff.
Whales Sold 110M ADA During the Rally
Despite Cardano price posting one of its biggest daily gains in history, whale activity suggests that large ADA addresses are not confident in a sustained momentum. Whales holding between 10M and 100M ADA tokens reduced their holdings by 110M tokens, suggesting that they likely sold as the price rallied past $1.
If whales are selling despite the price gain, it shows a bearish Cardano price forecast. This could weaken the current momentum and spark a price reversal.
Cardano Price Reverses After Being Overbought
After traders rushed to buy into yesterday’s rally, Cardano reached overbought levels, and the price is now facing a reversal. The RSI line is tipping south showing waning buyer interest. However, the RSI at 67 shows that a bullish momentum is still at play.
The fading MACD histogram bars also show that buyers are leaving the market, increasing the risk of further downside.
If selling activity continues, and Cardano price loses its current support at $0.97, it could trigger another decline to the next support levels of $0.81 and $0.65.
However, despite this selling activity and bearish signs, ADA price could still rally later this week due to the White House Crypto Summit. As such, traders should brace for volatile swings in Cardano price during the week.
The post Cardano Price is Up 80%, Should You Buy ADA here? appeared first on CoinGape.
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