Cardano Price Holds Above Key Support Level – Is Now the Perfect ADA Buy Opportunity?

The Cardano (ADA) price continues to hold above its 200DMA, a key support level over the past 6 weeks, with traders asking whether now might be a perfect time to buy.

Indeed, buying ADA at its 200DMA has proven to be a great short-term trading strategy in recent weeks.

After testing its 200DMA in early February, the Cardano price rallied 50% in 10 days. Meanwhile, after falling back to the 200DMA in late February, the Cardano price rallied as much as 80% in early March.

Could history be about to repeat itself?

Well, traders would be wise to realize that the situation in the crypto market right now is very different than it was a few weeks ago.

Trump’s announcement that Cardano would be included in a strategic US crypto reserve in early March was the catalyst for that stunning rally.

However, ADA didn’t make it into the digital asset stockpile, and the government has announced no plans to include it in the stockpile in the future.

Meanwhile, after a lot of hype that Cardano founder Charles Hoskinson would meet with key officials in the Trump administration in February, he was eventually snubbed and not even invited to the administration’s crypto event earlier this month.

Last at $0.72, the Cardano price is down about 40% from its earlier monthly highs, justified amid the pricing out of all this hype.

Cardano has been suffering amid a broader malaise in the crypto market as macro conditions turn for the worse.

The Fed threw the bulls a bone earlier this week when they slowed the rate of their quantitative tightening.

But the outlook for the US economy remains murky, with risks to growth and inflation remaining sticky rising.

A further deterioration of the macro backdrop could easily be the trigger for a renewed crypto market drop in the weeks ahead, and Cardano could easily lose its 200DMA.

How Low Could Cardano Go?

Just as the convincing break above the 200DMA in early November signified the start of a powerful bullish trend, a convincing break below the 200DMA in the coming weeks could signal the start of a new bearish trend.

It’s entirely feasible that the Cardano price might soon retest its February lows in the $0.55 area, and potentially even support in the form of the mid-2024 highs in the $0.40s.

Would it be a good idea to buy Cardano at these levels? Well, it depends on the risk appetite of the investor.

Cardano could do very very well in the years ahead. Its blockchain has a lot of potential for real world adoption, especially as it pivots towards becoming the go-to Bitcoin DeFi chain.

However, this is highly speculative. In its many years of existence, Cardano has failed to garner anything close to the real world adoption seen by rivals like Bitcoin, Ethereum and Solana.

That being said, deteriorating macro conditions aside, risks are tilted towards major cryptos seeing a lot of growth before Trump’s term is finished.

The US President has specifically marked out crypto as an industry that he wants to support, as he reiterated in remarks today.

Growth in the broader industry would be expected to “lift all boats,” meaning Cardano could do very well over the next few years.

Buying it on the dip is thus probably not a bad idea. That said, cryptos with a better track record of adoption like Bitcoin, Ethereum and Solana are probably safer bets with arguably just as much upside potential.