23 FEB 2022 (ADA)- Cardano (ADA) Report Card

By quantdoge | Daily Crypto Risk Report | 23 Feb 2022


Investment Disclaimer:

  • I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.
  • Past performance presented here is not an indicator of future performance.
  • This post expresses my own opinion about the cryptocurrency mentioned herein and is not an offer to buy or sell, or a solicitation of any offer to buy or sell the cryptocurrency mentioned in this post.
  • I do hold a long position in ADA as a token holder.

PSA

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This research writing is sponsored by Multi-Chain DeFi Liquidation Tracker, a decentralized finance (DeFi) data aggregator which tracks and analyses liquidation events across DeFi protocols of various blockchains in real time. While the app is still under development, you may follow their Twitter page for daily updates of liquidation statistics and charts. 

TL; DR

If you have no time to read through all the details, here are the main takeaways from today's writing.

-> [Technical Analysis] All technical indicators are implying that ADA was oversold.

-> [Quantitative Risk Analysis] Value-at-Risk is suggesting that ADA is trading at a similar risk level as 10 days ago. 

-> On average, Cardano managed to attract 520 new Twitter followers and 178 new Reddit subscribers every day for the past 30 days.

-> Over the last 6 months, "cardano" Google search metric has dropped 61.33 % from 50.0 to 19.33, an indication of declining in popularity.

-> A sharp drop in ADAUSDT long-short ratio was observed in the Binance futures market over the past 3 days.  

1A. ADA Project Updates

1. The knowledge base for Cardano is growing: Cardano Stack Exchange graduates from Beta version (07 Feb 2022)

Cardano Stack Exchange (CSE), a community-driven knowledge base for Cardano, is now recognized by Stack Exchange as a mature learning community. CSE has graduated from its trial period – dropping the ‘Beta’ label – confirms that it has reached a critical mass of useful, decentralized knowledge. A fresh Q&A site will facilitate knowledge-sharing for all Cardano related topics.

1B. Top 2 Good News for ADA HODLERS !!!

1C. Top Bad News for ADA HODLERS !!!

  • Cardano’s First DEX SundaeSwap Fails to Impress on Launch
    Statistic as of 2022-02-23 07:05 AM EDT: 9 positive votes, 28 negative votes

    SundaeSwap holds the distinction of being the first decentralized application to launch on the Cardano blockchain. Its launch, however, has been met with much criticism as the dApp has suffered some issues due to network congestion.

    (Extracted from Crypto Panic)

2. How Cardano Performs Relative to Other Cryptos ?

Performance of All Layer 1 and Layer 2 Scaling Cryptos Under Quantdoge Watchlist since 2021 (Sorted by % Return)

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ADA has undergone 372.43% return from USD 0.1821 to USD 0.8603 since 01 Jan 2021. ADA is the 12th best performing crypto assets among others here, with Fantom (FTM) being the leading project.

3. How Resilience Cardano Is Towards Bitcoin Crash Relative to Other Cryptos ?

Historically, all altcoins are somewhat dependent on Bitcoin price movement and it’s often the case where if Bitcoin falls, most altcoins would follow.

Top 3 Cryptos That Are Most Resilient To Bitcoin Crash During Each of BTC 4 Largest Crashes in 2021

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ADA has proven resilience against BTC crash in 1 out of the 4 instances.

During the last 4 BTC market crashes,

When BTC dropped by -13.47 %, ADA returned -24.61 % at 20 May 2021,
When BTC dropped by -13.13 %, ADA returned -17.3 % at 22 January 2021,
When BTC dropped by -12.16 %, ADA returned -11.26 % at 13 May 2021,
When BTC dropped by -11.39 %, ADA returned -17.54 % at 22 June 2021

4. Technical Analysis on Cardano

4.1. Volume Weighted Average Price (VWAP)

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VWAP is a technical indicator used by a trader to gauge the overall trend of an asset price movement. VWAP line (orange line) represents the volume-weighted average price (average price here is defined as the average of high, low and close prices) while close price line (blue line) represents the price when ADA is closed at the end of every single day. 

Whenever blue line (close price) is above orange line (VWAP), it indicates that the asset is gaining momentum and being traded higher than its average price level. This would represent a 'buy' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'sell' opportunity, anticipating that the price of ADA (blue line) to fall to its average level (orange line).

Whenever blue line (close price) is below orange line (VWAP), it indicates that the asset is losing momentum and being traded lower than its average price level. This would represent a 'sell' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'buy' opportunity, anticipating that the price of ADA (blue line) to rise to its average level (orange line).

As of 22 Feb 2022, VWAP is suggesting that ADA  is now trending downward and is currently trading at a price that is way below its week-long and month-long volume weighted averages.

4.2. Moving Average Convergence Divergence (MACD)

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MACD is often used by trader as a momentum indicator. There are 2 lines that form the above charts, namely MACD (12, 26) lines and Signal(9) line, while the histogram is calculated by subtracting Signal (9) from MACD (12,26). Histogram would fall to the negative territory whenever MACD (12, 26) is trending at a lower level than Signal (9) and rise to the positive territory whenever MACD (12,26) is trending at a higher level than Signal (9).

MACD (12, 26) is computed by subtracting the 26-day exponential moving average (EMA) of ADA closing price from its 12-day EMA. 
Signal (9) on the other hand is calculated as the 9-day EMA of MACD (12,26). 

As MACD (12, 26) goes higher away from Signal (9), it signifies that ADA is gaining momentum and whenever it goes trends at a lower level than Signal (9),it signifies that ADA is losing momentum. 

As of 22 Feb 2022, MACD is suggesting that ADA is losing its momentum as it enters a bear market.

4.3. Bollinger Band

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Bollinger band is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. Its chart made up of 4 lines, namely:

- SMA (20) (blue line), which is the 20-day simple moving average price of ADA
- Upper Band (orange line), which is computed by adding 2 standard deviations of ADA on SMA (20)
- Lower Band (red line) , which is computed by subtracting 2 standard deviations of ADA from SMA (20)
- Close (green line), which is the daily closing price of ADA

Whenever close line (green) touches the lower band (red), it indicates that ADA is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever close line (green) touches the upper band (orange), it indicates that ADA is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 22 Feb 2022, Bollinger Band is suggesting that ADA was massively oversold to the extent that it has crossed the lower band which often served as an undervalued technical threshold just few days ago.

4.4. Relative Strength Index (RSI)

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Just like Bollinger Band, Relative Strength Index is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. There are 2 psychological levels, i.e. 30 and 70 in RSI. Whenever the RSI reaches 30, it indicates that ADA is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever RSI reaches 70, it indicates that ADA is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 22 Feb 2022, RSI is suggesting that ADA is oversold across all moving average windows.

4.5. Price and Volume Analysis

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ADA trading volumes are depleting as it enters a bear market.

Based on the technical analysis presented above, quantdoge is neutral on ADA in the short run, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

5. Cardano Risk Profile

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Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Cardano defined above, ADA seems to trade at a similar risk level on 22 Feb 2022 as compared to 10 days before on 12 Feb 2022, with its biggest pullback being seen at -11.34% on a single day during the last 100 days. However, I could be wrong, hence please make your careful due diligence before making any financial decision.

6. ADA Community Analytics

Number of ADA Followers In The Past 24 Months

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During the past 24 months, Cardano followers have grown 431.55 % from 155,844 to 828,388 on Twitter and grown 801.93 % from 76,816 to 692,823 on Reddit.

Number of ADA Followers In The Last 30 Days

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In the last 30 days alone, Cardano followers have grown 2.91 % from 804,967 to 828,388 on Twitter and grown 0.75 % from 687,649 to 692,823 on Reddit.

Daily increment of Cardano Twitter followers peaked on 26 Jan 2022 and its daily increment of Reddit followers peaked on 11 Feb 2022.

On average, Cardano managed to attract 520 new Twitter followers and 178 new Reddit subscribers every day for the past 30 days.

7. Google Trends Analytics

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cardano reached its peak in Google Search on 2021-05-09 00:00:00 with a Google Score of 100
Over the last quarter, cardano Google Score has decreased 16.85 % from 23.25 to 19.33
Over the last 6 months, cardano Google Score has decreased 61.33 % from 50.0 to 19.33

8. Developer Activity Analytics

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Fork

Fork refers to the amount of time where the Github repo of current cryptocurrency is being copied. Higher fork number could mean that this cryptocurrency project is getting more interest in the developers community who likes to explore more on the deep technical of this project.

Cardano forks increased 6.67% from 585 to 624 in the past year.

Star

Star refers to the number of developers who bookmark the Github repo of current cryptocurrency. Higher star number could mean that this cryptocurrency project is getting more general interest in the developers community.

Cardano stars increased 7.67% from 3,481 to 3,748 in the past year.

Pull Request

Pull request contributor refers to developer who has made a successful improvements/ modifications on the Github repo of this current cryptocurrency project. Higher number of pull request contributors could mean that there is a high number of commitment given by developers to this cryptocurrency project.

However, a low number also could mean that the developer community of this project applies a strict standard when it comes to code review, so only developers who have published a high quality code with highly impactful features got approved.

Cardano pull request contributors remain stagnant at 80 over the past year.

9. Binance Futures Activities

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ADAUSDT futures have relatively more buyers than the sellers in this month of February. 

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ADAUSDT long-short ratios remain consistently higher than BTCUSDT and ETHUSDT futures. However, after 18 Feb, a lot of ADA long traders are exiting their positions while ADA short traders are building up their short positions fast, exerting a great selling pressure on ADA, hence resulting a sharp drop in its long-short ratio over the past 3 days. Please take note that this long-short ratio is simply just dividing the number of accounts who are long by the number of accounts who are short, without taking any buy/ sell volume into consideration. 

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At the time of writing, bulls are back in control as crypto futures market regained buy volumes. However, despite the bullish sentiment that BTC and ETH offers, ADAUSDT futures were trading sideways over the past hours.

If you like my analysis and articles, please follow me at @quantdoge for daily updates.

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quantdoge
quantdoge

Data scientist in crypto and blockchain space.


Daily Crypto Risk Report
Daily Crypto Risk Report

This blog was created by quantdoge, a data scientist in the cryptocurrency and blockchain space to publish daily risk reports on different cryptocurrencies. All published reports in this blog were analyzed with in-house algorithmic trading and quantitative risk management technology. ** Investment disclaimer: ** I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.

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