ADA, the governance token of the Cardano ecosystem, has benefited from the renewed sentiment in the crypto market. Coingecko data shows that the token rose by over 58% in the monthly time frame while simultaneously showing green in other time slots.
This is caused by several internal and external developments in the Cardano ecosystem and the crypto industry as a whole.
The market for cryptocurrencies is in the middle of a rally that made the majority of cryptos, Cardano included, recover lost ground when the bears clawed their way through 2022.
CoinMarketCap data shows the crypto market currently maintaining a total market capitalization of a little over $1.07 trillion.
Meanwhile, Djed – Cardano’s stablecoin in collaboration with COTI – is expected to be released in the next few days. This stablecoin is expected to boost ADA price, and perhaps help propel the crypto towards $1.
With major cryptocurrencies also continuing their rallies, we might see the token on or above the $1 mark.
How Does Djed Work?
Djed is an overcollateralized stablecoin built on top of Cardano to support the ecosystem. The stablecoin, unlike other stablecoins, won’t be backed by fiat currencies or complex algorithms. Djed would be backed by other cryptocurrencies likE ADA and SHEN.
SHEN, the reserve token of the Djed ecosystem, would maintain the stablecoin’s stability while ADA can be used to stake in the ecosystem to mint Djed. According to available information, the ratio would be between 400-800% of the backing tokens.
Djed will be the first stablecoin to integrate a formal verification process to guarantee that its price is stable, making it a major new entry for decentralized finance (DeFi) transactions.
$1 Target – Short Or Long Term?
ADA bulls are currently targeting $1 as they speculate that the release of Djed would cause a boom in the price of the token. However, the token’s price has hit a resistance range at $0.4. This could hinder the token’s further upward movement.
The $1 mark would be the bull’s long term target as the Djed rolls out. Investors and traders could try to consolidate at its current support which is at $0.3816. If the bulls are successful, the $1 target could actually be a reality in the long term.
ADA total market cap at $13 billion on the daily chart | Chart: TradingView.com
Investors and traders should also be careful in the short to medium term as the token’s price might retreat due to the rejection. However, they can rely on ADA’s correlation with major cryptocurrencies like Bitcoin and Ethereum that broke their respective resistances.
Monitoring their respective price movements could help with decision making in the medium and long term. With the Cardano stablecoin’s release around the corner, ADA bulls might be able to regain some lost ground with a possible break through $1.
Featured image from The Altcoin Oracle