ADA at Risk of Short-term Pullback Into $0.46s

ADA/USD could still bounce back towards $0.55. Source: FX Empire

As per the latest weekly report from Cardano’s developer Input Output Global (IOG), the number of projects building on Cardano had risen to 1,040 by Friday, a new all-time highs and up from 943 just two months ago. Moreover, the number of Non-fungible Token projects running on the Cardano blockchain had risen to over 6,300, while the number of native tokens issued on the Cardano blockchain was up to 5.5 million. Both also hit new record highs and were up from 5,656 and 4.8 million two months ago.

Thus, despite the ongoing crypto winter, Cardano development activity and adoption statistics have continued to trend in higher. According to rankings put out by crypto analytics firm Santiment earlier this week, Cardano has seen the highest development activity in the last 30 days, surpassing the likes of Ethereum, Polkadot and its test experimental so-called “Canary” network Kusama.

Santiment gave Cardano a developer activity score of 387.33, Polkadot and Kusama scores of 281.97 and Ethereum a score of 274.87. Strength in Cardano development activity comes ahead of the blockchain’s much anticipated Vasil hard fork upgrade scheduled for later this month. The crypto analytics firm compiled the ranking by looking at the number of submissions, code pushes and interactions each crypto project saw on open-source code-sharing website GitHub.

ADA Traders Await Vasil Upgrade Date Announcement

Meanwhile, IOG said that the node, ledger, and consensus teams continue testing Vasil functionality and working closely with Decentralized Apps (Dapps) and projects building on Cardano. ADA traders are waiting for IOG to announce the date of its Vasil hard fork upgrade, which was delayed back in June and pencilled in for some time before the end of July. Bulls will be hoping that ADA can rally as ETH did upon the announcement of a date for the so-called “Merge” to Ethereum 2.0.

Cardano’s developers say that the upcoming upgrade is the most complex program of development and integration on Cardano since its Alonzo hardfork added smart contract functionality to the blockchain back in September 2021. The Vasil hardfork aims to improve the network’s speed and scalability by reducing transaction size and, as a result, increasing the network’s throughput whilst also lowering transaction fees on the network.

One Twitter user and Cardano builder on Thursday outlined a few reasons why he thinks the upgrade will not take place by the end of the month. However, he said another delay would be “no big deal, since our (Cardano’s) credo (credibility) is to do things right instead of fast, and I for one am supporting this 100%”.

Risks To Watch Next Week: Big Tech Earnings, Fed Meeting, US GDP Data, Vasil Delay?

If Cardano’s Vasil upgrade was to be delayed next week, this could weigh on ADA’s price in the short-term, just as it did at the end of June. Meanwhile, cryptocurrency traders will also be watching a host of macro risks that could impact the crypto space exogenously.

Firstly, after a (mostly) upbeat start to the Q2 US earnings season, some heavy hitters will be reporting next week. Apple, Amazon and Microsoft – three of the top four largest US companies by market cap – will have reported Q2 results by the end of next week. The tone of their reports will be a key factor in determining the near-term direction of US equity markets and, given their close correlation, cryptocurrency markets as well.

Elsewhere, the US Federal Reserve is expected to implement a second-successive 75 bps rate hike, which would lift the target interest rate range to 2.25-2.5% from 1.50-1.75%. The Fed is continuing on its quest to quickly lift rates above the so-called neutral level (around 2.5%) in order to get a handle on inflation which is at multi-decade highs and approaching double digits on a YoY basis.

However, US data in recent weeks has pointed to a continued pullback in core price pressures in the US, boosting hopes that peak US inflation might be around the corner. The Fed’s concern about inflation will also be eased by a recent easing of market-based and consumer survey-based measures of inflation expectations which have also moderated.

The Fed also has to contend with a rapidly slowing economy. Amid the worsening cost-of-living crisis, consumer sentiment has been battered in recent months and this has been reflected in a pullback in spending. After business survey data on Friday showed that the dominant US services sector likely contracted this month, data out next week will probably show that the US economy shrunk for a second successive quarter in Q2, confirming that the economy was in recession in H1 2022.

If the Fed sounds a little more dovish next week and data confirms recession fears, markets may pull back on Fed tightening bets (as they did on Friday). This could provide a near-term boost for stocks and crypto.



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