What Does Cardano Even Do?

JC Parets
August 23, 2021

One great thing about Technical Analysis is that we don't have to pretend to be experts on every subject. Heck, I'm completely clueless on most things.

I know a lot about Baseball, a decent amount about Wine, and I can tell you the direction a chart is currently heading in. Outside of that, I'm mediocre at best on most topics.

So when we laid out the Cardano trade earlier this month, it was purely based on price. The idea was to go long $ADAUSD if it was above 1.40, which represented around $35-$40B in market cap at the time.

Yesterday Cardano went out at new all-time highs.

Regardless of whether we're talking about a Crypto, a Tech stock, an Energy company, Sugar Futures, Treasury Bonds or EUR/YEN, all we're looking for is a favorable risk vs reward proposition.

We're not here to be right. We're only here to make money.

There's a difference.

If Cardano wasn't above 1.40, then there was no reason to be long. That would mean that it was still stuck below the prior cycle peak.

BUT, above that level would signal that the demand has finally absorbed all of that supply, and prices could move on accordingly.

How high? Who knows.

I'm always less interested in how high you think something goes, and more concerned with what the market has to do to prove your thesis to be wrong, or invalid.

In the case of Cardano, it was price trading under 1.40.

So once we got above it, which it did a few weeks back, the trade was on.

Fortunately it worked out. But it's less about the profits and more about the lessons. This is why we look for big bases. This is why we identify favorable risk vs reward setups.

So now that we're so far in the money, more than 100% higher in a short period of time, how do we manage gains?

For me, it was more about the entry than anything else. I figured if we got that part right, then we worry about counting the money later.

And so here we are.

I'm looking at those May highs around 2.45. If we're above that then we want to stick with this one.

My thoughts are that if Bitcoin heads back to 65,000, then the Altcoins are likely to double and some even triple from here.

So Cardano above 5 is not out of the question. That would put its market cap closer to $160B, similar to that of companies like UPS, Bristol Myers and Royal Bank of Canada.

The key is going to be for Bitcoin to hold 47,000. If it falls back below, then I would also expect Cardano to be back below those May highs, and a less aggressive, more cash heavy tactical approach would be more appropriate.

But to be clear, that is NOT what is currently happening. It's actually the opposite. Bitcoin IS holding that 47,000 level and Cardano IS holding above 2.45.

As long as that's the case, we want to ride this higher until Bitcoin hits 64,000.

Then we feed the ducks.

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Contact Peter - who just got married this weekend, by the way. So shoot him a note and congratulate him!

 

 

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