Cardano Prepares for 25% Bounce Following SEC’s Clean-Chit

2024 has been challenging for Cardano (ADA), with its market valuation dropping by over 35% while the broader crypto market has surged by 45%.

However, the Charles Hoskinson-led cryptocurrency is now showing signs of a bullish revival in the second half of the year, supported by a flurry of optimistic fundamentals—including a crucial update from the United States Securities and Exchange Commission—and technicals that suggest a potential upside.

ADA Price Eyes 25% Bounce in August

From a technical viewpoint, ADA eyes a 25% bounce in August as it nears a critical support level.

Notably, as of July 31, the Cardano token was testing the lower trendline of its prevailing ascending channel pattern for a potential rebound toward the upper trendline at around $0.50. This outlook takes cues from ADA’s rebound between July 4 and July 16.

ADA’s rising daily relative strength index (RSI) is supporting the bullish outlook while holding strong above ascending trendline support. As of July 31, its reading was around 41, indicating more upside momentum for ADA in August, at least until the RSI reaches the overbought threshold of 70.

Nonetheless, it is vital to wait for a clear breakout above the 50-day exponential moving average (50-day EMA; the red wave) at around $0.416 before eyeing a run-up toward $0.50. This wave has served as resistance in the past few days.

If not, the risk of ADA’s price returning to the channel’s lower trendline and breaking below it will likely increase. Such a move may trigger a bear flag breakdown scenario, as shown below.

The ADA’s downside target in the event of a bear flag breakdown comes to around $0.27, down by approximately 30% from current price levels.

Cardano Fundamentals: SEC’s U-Turn and Chang Hard Fork

From a fundamental analysis perspective, Cardano’s sentiment looks skewed toward the bulls.

The first piece of good news comes from the US SEC, which has withdrawn its request for a court ruling to classify the tokens named in its lawsuit against Binance as securities.

On July 30, 2024, the SEC responded to the court’s minute order issued on July 9. In this filing, the agency indicated its intention to amend its complaint concerning the “Third Party Crypto Asset Securities” referenced in its opposition to Binance’s motion to dismiss.

This amendment effectively excludes ADA, Solana (SOL), Polygon (MATIC), BNB (BNB), and other cryptocurrencies from being classified as securities.

Meanwhile, Cardano’s bullish outlook is receiving a further boost from its ongoing Chang Hard Fork implementation. This network upgrade aims to increase Cardano’s scalability while enhancing its security features. Additionally, it aims to further decentralize the network by improving the consensus mechanism and allowing more participants to contribute to network validation.

Chang Hard Fork may make Cardano more competitive with other blockchain networks and potentially attract more developers and users to its ecosystem. The total-value-locked (TVL) across the Cardano network, for instance, increased by 26 million ADA in July, indicating the same.

In addition, the improving Federal Reserve rate cut scenarios in September and Donald Trump’s endorsement of the crypto sector further boost the ADA’s upside outlook.