Cardano and Ripple Under Pressure But Long Term Outlook Remains Intact

May 26, 2022 05:04 PM ET
Cardano and Ripple Under Pressure But Long Term Outlook Remains Intact
  • ECB President Cryptocurrency warning
  • Cardano drops to key support level
  • Ripple vulnerable to further losses

Cryptocurrencies have plunged across the board this year with no reprieve in sight. While Bitcoin has erased more than half of its value since its peak highs of last year, it is not the only coin under pressure. Cardano and Ripple are other high-profile coins feeling the brunt of negative rhetoric about digital assets.

European Central Bank president Christine Lagarde reiterating that cryptocurrencies aren’t worth a dime has sent jitters in the market. The remarks come at one of the worst times as sentiments have plunged to all-time lows as investors flee speculative assets.

Cardano technical analysis

Cardano is one of the coins feeling the brunt of investors shifting their attention to a safe haven away from riskier assets. After shedding more than 80% of its value from peak highs registered last year, the coin remains susceptible to further losses as it continues to trade at the pivotal level.

Chart showing ADA at support level

ADA USD has struggled to power through the $0.60 level affirming the strong bearish momentum with the coin trading at the $0.50 level. It is susceptible to plunging back to 16-month lows of $0.39 a coin, the next substantial support level.

A daily close below the $0.50 should give short-sellers the leeway to lower the coin as major indicators have turned bearish after the recent stalled bounce back.

Ripple technical analysis

Ripple is another coin susceptible to further losses after a recent stalled bounce back. With the coin trading at the key $0.40 support level, it remains exposed to further losses. A daily close below the support level could result in the coin plunging back to lows of $0.33 registered early in the month.

Chart showing XRP under pressure

The Relative Strength Index is nearing the oversold territory affirming the strong bearish momentum. On the flipside, accumulation taking place at the $0.40 level could be the catalyst to fuel a bounce back after the minor correction.

Cardano and Ripple Outlook

Cardano and Ripple have shed significant market value and continue to trade near oversold territories. While the sell-off has come at the backdrop of the broader market crashing, the prospect of a bounce back from current levels is high.

With the coins trading at 15-month lows, it is emerging that investors holding large amounts of the tokens are using the opportunity to accumulate. Recent data has shown that crypto wallets doing more than 10 million ADA coins increased month over month by 2.15%.

The increase signals whales are increasingly buying more tokens at current depressed valuation levels. While the short-term outlook remains bearish, there is no doubt about Cardano and Ripple's long-term prospects.

Ripple has already carved a niche in international payments backed by the RippleNet product. As the need for low-cost real-time transactions grows, demand for XRP is expected to increase, which should help support further price gains.

Ripple has also taken a significant hit owing to its ongoing tussle with the SEC. The settling of the matter where the company’s executives are accused of selling illegal securities could be the catalyst to fuel a bounce back from the deep pullback.

Similarly, Cardano is also becoming an important player in decentralized finance, thus the name Ethereum Killer. Its blockchain’s ability to process 65,000 transactions per second at some of the lowest costs keeps attracting developers to the platform.

Bottom line

Cardano and Ripple look set to continue underperforming in the short term going by the overall bearish momentum in the market. A plunge below the key support levels could result in the coins edging lower despite the long-term downtrend. However, the coins are solid long-term plays, especially after the recent deep pullback.

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