Cardano’s (ADA) price experienced a 7.25% decline, reaching $0.474 on May 22, following accusations by cryptocurrency analyst Justin Bons that the blockchain project is highly centralized.
Bons claimed that Input Output Global (IOG), the parent company of Cardano, controls 5 out of the 7 “genesis keys” of the blockchain. These keys were used to sign and establish the initial block of the Cardano blockchain in 2015. According to Bons, these keys allow for seamless code changes without the need for a hard fork.
The bearish setup triggered by Bons’ comments could potentially lead to a 30% price crash for ADA by June.
Cardano’s ongoing correction is in line with a descending trendline resistance, forming a symmetrical triangle pattern. This pattern is considered a bearish continuation pattern and typically resolves when the price breaks below the lower trendline, resulting in a drop of the maximum triangle height.
As of May 22, ADA’s price was correcting after testing the upper trendline of the triangle. It is expected to retreat towards the lower trendline at around $0.44, representing a 6.5% decrease from the current price levels by the end of May.
If a decisive breakdown of the symmetrical triangle occurs, ADA’s price could drop towards the $0.336-0.366 area, approximately 20-25% lower than the current price level.
On a positive note, ADA’s price is bouncing back after testing its multi-month ascending trendline support.
A broader rally is possible if the price breaks above its 50-3D and 200-3D exponential moving averages (EMA). In this case, ADA’s initial upside target would be around $0.67, a 35% increase from the current price levels. The $0.67 level has previously served as resistance in December 2023 and May 2022.
Interestingly, Cardano’s ongoing price correction coincides with an increase in ADA supply held by its wealthiest addresses, suggesting that these whales are disregarding Bons’ concerns about centralization. Whales holding 10 million-100 million ADA and 100 million-1 billion ADA have been accumulating more tokens, indicating their anticipation of further gains.
Overall, while Cardano faces criticisms of centralization, the market is responding with both bearish and bullish indicators. It is important for readers to conduct their own research and exercise caution when making investment decisions.