Cryptocurrency

Analyzing Cardano’s potential for price correction amid Djed stablecoin launch


  • Cardano’s stablecoin will likely be launched subsequent week.
  • ADA will probably shed the features it has recorded to this point this yr.

Cardano’s [ADA] native over-collateralized stablecoin, Djed will likely be launched “next week,” as per a 24 January blog post revealed by COTI, the layer-1 scalable enterprise community powering the coin. 


Realistic or not, right here’s ADA’s market cap in BTC’s phrases


According to the publication, following its launch within the coming days, the over-collateralized stablecoin and its reserve coin, SHEN, will likely be listed on the Singaporean cryptocurrency change, Bitrue. 

 

Due to its nature as an over-collateralized stablecoin, Djed will likely be backed by Cardano’s native coin ADA and reserve coin SHEN. 

Over-collateralized stablecoins are backed by property which have the next worth than the stablecoin itself. This is in distinction to different forms of stablecoins, corresponding to these backed by a fiat foreign money or people who use algorithmic mechanisms to take care of their worth. Thus, there are considerations about their long-term stability.

There have been a number of situations of over-collateralized stablecoins which have failed previously. One instance is Basis Cash [BAC] owned by disgraced founder Do Kwon. It was a stablecoin venture that raised $133 million in funding from enterprise capital corporations. However, the venture shut down in December 2018 after dealing with regulatory challenges over its backing.

Another instance was Carbon [CUSD], an algorithmic stablecoin that was over-collateralized with Ethereum [ETH]. However, the venture additionally shut down on account of regulatory challenges.

ADA sees a pullback

Exchanging fingers at $0.3564 per coin at press time, ADA’s price declined by 6% within the final 24 hours. After closing 2022 on a tumultuous notice, ADA’s price rose by 40% for the reason that yr started, information from CoinMarketCap revealed. 

With waning shopping for stress and elevated profit-taking in the previous few days, ADA’s on-balance quantity (OBV) was noticed in a downtrend on a every day chart. As of this writing, the alt’s price was 43.44 billion, having dropped by 1% since 22 January.


Is your portfolio inexperienced? Check out the Cardano Profit Calculator


A gentle fall in a crypto asset’s OBV is commonly taken as a bearish sign. It usually signifies that there’s extra promoting stress than shopping for stress, culminating in a fall in an asset’s price. Since 22 January, ADA’s price has fallen by 5%.

An evaluation of ADA’s Simple Moving Average (SMA) revealed a resurgence of a bearish development out there. At press time, the 50-day shifting common was positioned beneath the 200-day shifting common. This is usually an indication of a downward development. 

Source: ADA/USDT on TradingView

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