Analysis: Cardano up 100%, Solana 1950%. Which is the better investment?
Even though Bitcoin seems to be on its way to a new All Time High, Cardano still remains well below 50 cents and the increase is slow. How long will it take before Cardano performs as well as its competitors? Or are the glory days of the cryptocurrency over?
In this analysis I briefly discuss the price position of ADA and focus mainly on a comparison with two other well-known crypto coins: Ethereum and Solana. How are these coins performing, and where is Cardano lagging behind? This analysis will provide you with more insight into this.
The 4-hour chart of Cardano
On the 4-hour chart below, each candle equals 4 hours. Since the beginning of May, the price has formed a triangular pattern, which is often called a continuation pattern, because the price usually breaks out in the direction of the trend. In the case of Cardano, the price entered a decline in this pattern, which could actually predict a bearish breakout towards 40 cents.
However, given Bitcoin’s positive moves, the good-looking Cardano/Bitcoin valuation, and the recent strength the price is showing after a short fake-out below the pattern (see red box), I am confident of a bullish breakout. The only question that remains is whether the Open Interest supports this. As can be seen below the price, the Open Interest has risen significantly while the price showed little movement. So there are many trades open that focus on a certain price direction. The price often chooses a max pain scenario to liquidate these trades. That raises the question: Is it now the turn of the longs or shorts?
Suppose the price follows the blue arrow and rises; then keep an eye on whether the Open Interest is rising sharply or falling. If the Open Interest rises, more longs are opened. If the Open Interest falls, shorts are closed or liquidated. For a healthy movement, we mainly want Open Interest to return to normal levels, so I hope for the latter scenario.
ADA vs SOL and ETH
It is clear that Cardano is performing poorly compared to other cryptocurrencies. There is a negative atmosphere on Crypto Twitter surrounding this coin, and many seem to be losing hope. Is this correct? Let’s take a look at the prices of other cryptocurrencies.
Below we see the price of the second largest cryptocurrency, Ethereum. Last year, the price entered an accumulation phase where it successfully broke out, and the expansion phase began. The price is currently more than 330% above the bottom. I see a healthy movement and a nice return for a major cryptocurrency.
Solana shows the same principle, but with a much better return. After the accumulation phase, the price broke out and rose well above $150, resulting in an impressive 1950% increase from the bottom. Bizarre!
And now Cardano. Accumulation phase? Check. Outbreak? Check. Expansion? Unfortunately not. While Ethereum and Solana have seen hundreds of percent gains, Cardano is only showing a measly 100% increase from the bottom and has been moving sideways for months. What is going on here?
While the IOHK team continues to work hard on the blockchain, great projects such as World Mobile are launched, and more and more initiatives are being launched to increase liquidity with stablecoins and connection to exchanges, the price is lagging behind. It is not known when this catch-up will occur, but it will be significant. The fundamentals are positive, the 4-hour chart shows positive signals, the ADA/BTC is at a crucial point, the price remains above the accumulation range and the expansion phase has yet to take place.
So which cryptocurrency is it safer to invest in? In a coin that has already gone through the expansion phase, such as Solana and Ethereum, or in a coin that has lagged behind but of which more and more signals are now turning green?
