Cardano (ADA) Faces Resistance, Altcoin Season Unlikely Amid Economic Uncertainty

Cardano (ADA) is currently testing key near-term resistance around its 21-day moving average (21DMA). While there is a growing likelihood of a modest short-term rebound, the outlook for a sustained rally is not promising. ADA broke above a short-term downtrend about a week ago, and if it can also break above its 21DMA, a bounce to its 200DMA in the $0.70s is likely. However, in the broader context, ADA remains within its recent multi-month range of $0.50 to $1.20. The prospects for a major breakout above this range are currently dim due to poor risk appetite in the broader market and the lack of new liquidity.

The Trump administration's economic policies, particularly tariffs, are expected to harm the US economy in the short term while pushing up inflation. This prospect of weaker growth is hurting risk assets like stocks and crypto. Additionally, the reluctance of Fed policymakers, including Fed Chair Jerome Powell, to cut interest rates due to fears about sticky inflation is exacerbating the situation. Altcoin seasons that have benefited the Cardano price in the past have typically come at times of mass liquidity injection from the Fed. However, a new flood of liquidity is unlikely to materialize anytime soon, so major altcoins like Cardano are set to continue to struggle.

If the US economy tilts into recession later this year and the Fed doesn’t respond as aggressively as the market hopes, this could lead to substantially lower crypto prices in the coming months. The Cardano price could easily slip back to test its mid-2024 levels around $0.30. For a major rally to send the price surging back towards record highs above $3.0 per token, several conditions need to be met. Firstly, the economy will likely need to be coming through the other end of any recession, allowing risk appetite in the broader market to pick up. However, for altcoin season to really get going, major easing from the Fed would be required. If the Fed is pumping the market full of quantitative easing (QE) again, this would signal the potential arrival of a new altcoin season. Under such circumstances, a 400% rally back to record highs for ADA would be very possible. In fact, Cardano could even go further than that before the end of Trump’s four-year term.

The Trump administration and current Congress are massively pro-crypto, with both pushing regulatory policies and legislation designed to bolster growth in the industry. This should lift all boats, including the Cardano price. However, Cardano lacks substantial adoption compared to some of its closest rivals like Solana and Ethereum. Given its high level of adoption and developer activity, Solana is likely to extend its lead over Cardano in the coming years. This is probably going to be reflected in better SOL price performance compared to ADA. Those confident in Solana’s outlook would do well to accumulate SOL during the current market dip. However, it might also be a good idea for Solana investors to add highly promising Solana projects like Solaxy (SOLX) to their portfolios as well, given the prospect of even higher gains.

Solaxy (SOLX), a pioneering Layer-2 solution for the Solana blockchain, addresses critical network congestion and scalability issues, enhancing transaction speed and reliability. By processing transactions off-chain and settling on Solana’s mainnet, Solaxy ensures low fees and high throughput, supporting applications like meme coin trading. Its presale, launched in December 2024, has raised over $30 million, reflecting strong investor confidence. Priced at $0.001694, SOLX offers 135% staking annual percentage yield (APY), with over 8.3 billion tokens staked. Audited by Coinsult, Solaxy’s robust tokenomics and cross-chain compatibility with Ethereum position it as a compelling investment opportunity within Solana’s thriving ecosystem.