ADA, the native cryptocurrency of the Cardano blockchain, shows a slight uptick of 0.35% during Tuesday’s U.S. market session, trading at $0.70. With the overhead resistance backed by multiple EMAs, buyers are struggling to achieve a bullish breakout despite the recent launch of the first Bitcoin DeFi Protocol—Cardinal. The protocol enables Bitcoin holders to participate in Cardano’s Decentralized Finance (DeFi) activities, despite losing control over the asset. But will the initiative boost ADA to a $1 rally?
Cardinal Protocol: Bridging Bitcoin and Cardano for DeFi
Cardinal is a newly launched protocol that enables Bitcoin users to wrap unspent transaction outputs (UTxOs) into the 1:1 pegged token on Cardano. The initiative, in its primary form, focuses on Bitcoin Ordinals, which are wrapped into Cardano Non-Fungible Tokens (NFTs).
These wrapped assets enable holders to participate in Cardano’s DeFi services, including lending, staking, and borrowing. When required, the users can burn the wrapped tokens to release their Bitcoin asset back into its native cryptocurrency.
To ensure security and reliability, the Cardinal protocol operates with a trust-minimizing protocol, where a small set of honest operators manage the transfer of assets between Bitcoin and Cardano.
Unlike traditional federated systems that require an honest majority, Cardinals only require one honest operator to maintain security and the integrity of the asset.
The Cardinal protocol stands out from other Bitcoin bridges in that it doesn’t rely on third-party liquidity. It hands over Bitcoin to its provable owners directly through a one-of-a-kind transfer-of-ownership mechanism, offering an efficient and secure means of cross-chain asset transfer.
However, the initiative has impacted the price as it is not production-ready.
“The protocol works, but as mentioned in the paper, we don’t consider it production-ready yet. Some improvements are incoming. Stay tuned for the 1.0 version,” said Roman Pellerin, Chief Technology Officer, in his X post.
ADA Price Challenges Major Resistance
Since last weekend, the Cardano price has increased from $0.62 to $0.72, representing a 15.35% growth in its current trading value. In the daily chart, this upswing showcased a failed breakdown from $0.65, which has possibly liquidated several hasty sellers.
The buying pressure likely followed broader market recovery driven by Bitcoin’s surge to the $110,000 mark. Currently, the ADA price trades at $0.70 and stands just inches away from the $0.72 resistance.
The resistance above is backed by a cluster of daily EMAs (20, 50, 100, and 200), creating a high supply region against buyers. If the coin price breaks above this barrier, buyers will start to regain control over the price movement, driving a higher rally.
However, the mid-term trendline in ADA remains bearish under the influence of a downtrending trendline (red line above) could hinder a price recovery to $1.
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