24 April 2021 (SAT)- Cardano (ADA) Daily Risk Report

By quantdoge | Daily Crypto Risk Report | 25 Apr 2021


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. 
1. Top Good News for ADA HODLERS !!!
  • Cardano’s upcoming Alonzo update pushes ADA price despite a major delay

    Statistic as of 2021-04-24 10:43 AM EDT: 58 positive votes, 7 negative votes

    Cardano will strive to become an Ethereum contender if the upcoming Alonzo update lives up to the expectations of being a game-changer.
    (Read more on CryptoPanic)

  • World’s First Cardano and Stellar ETPs To Launch on Swiss Stock Exchange
    Statistic as of 2021-04-24 10:43 AM EDT: 38 positive votes, 0 negative vote

    Switzerland-based 21Shares AG (formerly known as “Amun AG”), which is considered one of the pioneers in issuing crypto exchange-traded products (ETPs), has announced that it will soon be launching the world’s first $ADA and $XLM ETPs on the Swiss stock exchange (aka SIX Swiss Exchange). ETPs are “collateralized, non-interest paying debt securities designed to replicate […] (Read more on CryptoPanic)

  • Cardano Development Company Launches Hiring Spree Ahead of Smart Contract Rollout
    Statistic as of 2021-04-24 10:43 AM EDT: 41 positive votes, 3 negative votes

    Input Output Hong Kong (IOHK), the company behind Cardano (ADA), is posting new job openings ahead of the August launch of the Alonzo upgrade that will add smart contracts functionality to the seventh-largest cryptocurrency.  IOHK marketing and communications director Tim Harrison says the company is on a hiring spree amid the soaring interest in the […] (Read more on CryptoPanic)

2. How Cardano Performs Relative to Other Cryptos ?

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As of 24 April 2021, Cardano has made a cumulative return of 3371.65% since Jan 2020 and 644.71% since Jan 2021. It is currently the 3rd best performing crypto asset since Jan 2021 as compared to the other cryptocurrencies presented above.

3. Technical Analysis on Cardano

3.1. 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 (cross 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 (cross 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).

On 24 April 2021, VWAP suggest that ADA is losing momentum and traded at a level lower than its average price range of around USD 1.20.

3.2. 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. 

On 24 April 2021, MACD suggests that ADA is losing momentum and currently trending below its average momentum. 

3.3. 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. 

On 24 April 2021, Bollinger band suggests that ADA is trading at a fairly normal level (i.e. neither undervalued nor overvalued). 

3.4. 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. 

On 24 April 2021, Bollinger band suggests that ADA is trading near its undervalue threshold at 30 on calculation windows of 14 days, 28 days and 32 days.

Based on the technical analysis presented above, quantdoge holds a slight bullish stance on the short-term price outlook of Cardano and expects Cardano to increase a little higher than it is now at USD 1.10 per ADA a week later, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

4. 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 lower risk level on 24 Apr 2021 as compared to 10 days before on 15 Apr 2021, with its biggest pullback being seen at 19.82% 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. 

5. Price Simulation for Cardano

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If there is no major news update in the next 7 days, quantdoge simulation shows that there is a slightly higher chance for Cardano to retrace to a lower price level within the week than it is for it to rise to a higher price level. However, I could be wrong as my simulation is based on the assumptions that there would be no major news update nor fundamental changes on Cardano within the next 7 days and the probability distribution for ADA to trade higher than its current level is equivalent to the probability distribution for it to trade at a much lower level. Please make careful due diligence before making any financial decision. 

How did quantdoge simulation perform vs the actual ADA price movement over the last week ?

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Over the last 7 days, ADA has been trading at the lower region below 25% quantile of all quantdoge simulations, indicating that ADA was risky to the down side over the last week. 

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If you are into Ethereum (ETH) and Binance Coin (BNB), I have made similar analysis on them at:

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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