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Cardano- Opportunity or Abort?

Updated: Sep 29, 2021

Overview

Cardano has been one of the more popular cryptos since initiating a solid upward trend alongside many other cryptos in January 2021. Cardano was created by one of the cofounders of Ethereum and shares many similarities with one of its main competitors in the crypto space.


"Cardano is the first blockchain platform to be built through peer-reviewed research, to be secure enough to protect the data of billions, scalable enough to accommodate global systems, and robust enough to support foundational change"(cardano.org).



Cardano vs Ethereum

Cardano and Ethereum were both created to function as decentralized application platforms- different than Bitcoin that functions as a medium of exchange and a store of value.

Bitcoin and Ethereum currently use a proof-of-work consensus mechanism. Cardano uses a proof-of-stake system. The proof-of-stake system is proving to be more robust and scalable over time.

Ethereum is transitioning to the proof-of-stake soon with ETH 2.0.

PoW vs PoS

Proof-of-Work and Proof-of-Stake are the consensus mechanisms used to verify transactions on the blockchain or within the program. A basic contrast between proof-of-work and proof-of-stake might mention that a proof-of-work consensus is viewed as less scalable because it requires much more energy and computing power, and miners ultimately have to sell the coins to cover the bill. Proof-of-Work however is more secure because it is a completely decentralized algorithm. A network of miners computes complex calculations to keep the blockchain running.

A Proof-of-Stake consensus replaces miners with validators and gives mining power based on the percentage of coins held by the miner. PoS transactions require much less energy and fewer resources than PoW. Cardano has developed and implemented the Ouroboros consensus protocol- the first PoS protocol that has proven to be secure. Ouroboros requires a small number of ADA holders to be online and maintain good network connectivity, allowing transactions to be validated cheaply and quickly.

Proof-of-work is less scalable but more secure; Proof-of-stake is more scalable, energy efficient, but perceived as less secure because nothing is anchoring the blockchain and holding it in place.

Did you know?

Cardano incorporates a peer-review system in which developers, scientists, and other programmers can review upcoming projects and the theories set forth in scientific papers by Cardano. These papers are reviewed and studied at conferences by top scientists and programmers who are kept anonymous at the time to prevent any bias or negative consequences. The goal is that each project or expansion is reviewed by experts in a given field before being finalized. Cardano has over 100 published peer-reviewed papers to date.



Trading

Chart progression


Daily-

D-1- first main channel with the same angle respected on both sides.


D-2- found a bigger channel that again has the same angle respected on both sides (as well as midpoint).

2 Hour charts- (zoom in, same color channels)

2H1 - short term down channel (red).


2H2- horizontal key levels



Final- Analysis (same 2H chart)-

Trading observations


-Strong downtrend since early September

-the safest way to ensure this downtrend is ready to turn up would be to wait on the upper line of the red channel to break. The top line in the red channel is the strongest indicator of downward rejection (resistance), and upon breaking would relieve a heavy downward pressure on the market.

-If i am looking for my best-possible entry point, then i will look to the bottom side of the same red channel to set targets and spread my entries out as this channel continues downward.

- I like to look for intersections between horizontal key levels and channels to set limit orders on separate entry points.

- the market today showed a good bit of rejection and created a possible entry point.

- other possible entry points on the way down would begin at the $1.87 area where one horizontal level was created.

-The next level being the cross between multiple daily channels is my favorite entry point based on the charts. Often referred to as Confluence- having multiple reasons to enter a trade from a similar price point can signify likely places the market will turn and good entry points for a trade. In this case looking at the D-2 chart, two separate channels converge on the same price point just under $1.8. I will add more to my position if the market makes it down to that level.

I-The final level of support looks to be around $1. This is viewable (but not noted) on either daily chart above. If Cardano reaches close to $1, then will again consider adding to my position. But I will be reevaluating whether Cardano still has its edge on the playing field and if it's worth holding or not.



- If you are a more conservative trader and only want to have one entry point to keep your trading more simple, or maybe you're afraid of recent economic indicators and want your best chance at a good position instead of catching falling knives, then I might suggest watching charts regularly to see when the market attempts to turn around at one of these key levels- as opposed to setting a limit order. The difference is a balance between assuming the market will turn around at a key level, and having the patience to wait and ensure the market is actually turning at the level. Aggressive option one you are predicting the market; the safer second option you are waiting to confirm the market is actually turning at your desired key level before entering the trade.


- I added to my Cardano position at market today while checking these charts in the afternoon around ; knowing we are in a steep downtrend that many 'experts' anticipate to continue. This trend could easily continue roaring downward until the upper red line is broken and the trend is at least shaken up a bit, but the amount of rejection around the $2 mark today as I was checking charts created a solid bottom with potential and became an entry point to add a bit to my total position.



Summary

Cardano has been in a solid downtrend since hitting around $3.10 in early September. Many other cryptos are experiencing a similar pullback right now. An unexperienced trader will get scared when long-term markets drop, but a seasoned trader often looks to add to the position in good spots on a pullback if the asset is trusted by that individual. Yes there are times any trader will exit a losing position that is anticipated to continue down, but for me personally- the longer I trade the more I intend to hold onto longer term positions, and add to them during pullbacks while assuming a longer-term upward journey. Often times the lower levels of resistance set the breaking point or stop level at which I would not want to hold below. [I type with the flow of my brain bear with me.] Almost any trader can recite the goal of 'buy low sell high', but it takes a level of mental fortitude and a history of good recordkeeping to accomplish. The ability to watch as your position's total value is dwindling and decide "yep, adding more in the fire" is difficult. You must first understand why you would trust the market on a larger scale by observing the longer-term lightning bolt trends with pullbacks the market has created over time; then choose whether it's time to bail out of a bad position, or add to a position that is pulling back during a good trend.


Cardano is in its largest pullback to date- opportunity or abort?

For me personally, I trust Cardano into the future mostly because of its unique Ouroboros consensus mechanism and perceived scalability.


Key takeaways-

Trading is a balance between position and direction. If we are thinking in a perspective of long trades, then your perfect position is the lowest point in the market at any given time- but how do you know it's going to go back up in your direction? On the other hand- the most sure you can be of the direction is after the market has already turned and gone back up.. but at this point it's often too late to catch the bus and you've missed your opportunity.

A balance between wanting a great position, but still having patience to wait on the market to confirm the direction is a great concept to work on while trading any asset.


Trade safely- T

Thank you for your time



FNL Crypto DNA


 

FNL content including, but not limited to, articles, podcasts, videos, live streams, and websites are intended for informational purposes and should NOT be considered financial, investment, nor trading advice. Cryptocurrency, futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. https://futuresnetworks.live/risk_disclaimer







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Rob B
Rob B
22 בספט׳ 2021

Stellar analysis Travis. Ill wait for the upper channel to break! :)

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