Cardano suffers 4% dip ahead of Shelley testnet launch

Cardano has been the top-performing altcoin among the top cryptocurrencies, rising into the top 10 courtesy of a 68% rally since May

Cardano’s Shelley public testnet is live and could pave the way for the launch of the update this coming August.

But although anticipation and excitement are still high, the price of Cardano has cooled off with a 4.4% pullback over the past 24 hours.

The value of the token jumped from $0.0485 around mid-May to top $0.0900 by June 4. It was the coin’s highest price level since June 2019.

ADA/USD has surged over 68% in the past month and is trading nearly 160% up year-to-date. Cardano’s stellar performance in the period propelled it into 10th position on CoinMarketCap, but the dip over the past 24 hours has seen Tezos overtake it.

Why is Shelley important?

Shelley is a phase in the Cardano roadmap that should see the platform become fully decentralized, with independent pool validators incentivised in its Proof-of-Stake (PoS) system. The update also introduces delegation, where ADA holders can delegate their tokens to a staking pool and earn rewards.

The public testnet follows the launch of the incentivized testnet (ITN) in November 2019 and will lead to the mainnet expected to go live July 29. Holders who did not enter the ITN last November will have to wait until the mainnet launch to delegate the Cardano coins and earn staking rewards.

Cardano addresses hit an all-time high

Cardano’s on-chain strength is key to a near term push that could return it to local highs at $0.095. Potentially, Cardano could hit prices above $0.100 in June, or even higher given the increased adoption of the token as evidenced in the number of unique addresses holding Cardano tokens.

According to the blockchain analytics platform, IntoTheBlock, the addresses holding the tokens surged to an all-time of 385k addresses last week.

Another catalyst for the new uptrend is Cardano’s overall Net Network Growth, as well as the Bid/Ask Volume Imbalance — two metrics pointing to a return to bullishness.

Cardano technical picture

While the bulls retain the upper hand, the launch of the Shelley public testnet has coincided with a dip in buying pressure. This follows a consolidation at prices above $0.080 in a two-week timeframe that put it in danger of turning south.

At the moment, ADA/USD is posting the largest drop among the major altcoins with its value just above $0.0818.

ADA/USD faces resistance at $0.0900 on the upside and above that, $0.0923 at the 138.2% Fibonacci retracement level. Buyers have already run into rejections at this level and another attempt will only come once bulls mount a serious challenge above $0.086.

Clearing this level opens up $0.1000. However, a downside flip remains very likely as RSI points to Cardano being overbought. A short-term correction is therefore very much in the picture.