- Cardano token has jumped sharply as traders react to the Bitcoin ETF news.
- Analysts expect that the SEC could approve more Cardano ETFs soon.
- There is one big risk that could prevent this from happening.
Cardano price has recovered modestly after plunging to a low of $0.4619 last week. ADA, its network token, has risen to $0.60 as buyers attempt to retest last year’s high of $0.69. Other altcoins like Ethereum, Solana, and Tron have also bounced back recently.
Is Cardano ETF next?
The biggest crypto news of the week was the decision by the Securities and Exchange Commission (SEC) to greenlight a spot Bitcoin ETF. This was one of the biggest events in Bitcoin’s 15-year history. It was also in line with what most analysts were expecting.
Now after this approval, investors are looking at the next potential ETF applications. In this case, I suspect that companies like Blackrock, Invesco, Ark Invest, and Fidelity will file for more ETFs in the coming months.
A potential crypto ETF should have a few qualities. First, it should be a popular cryptocurrency in the community. Second, it should be a big cryptocurrency in terms of market cap. Third, the crypto should be highly liquid. And finally, it should not be a financial security.
In this case, some investors believe that Cardano fits the criteria. For one, it is one of the most popular coins in the industry. Its popularity jumped in 2021 as investors sought for a better alternative to Ethereum.
Second, it is one of the biggest coins in the industry with over $20 billion in valuation. This makes it a top-ten cryptocurrency. It is also a highly liquid cryptocurrency that is offered by most exchanges.
However, the risk for Cardano is that it is a proof-of-stake cryptocurrency with staking features. This means that it could be challenging to convince the SEC to approve it. For one, the SEC would want to know how the staking rewards are generated and who has the final say on allocation.
This is the same problem that Ethereum and the likes of Avalanche and Solana faces. In this case, I don’t think that the SEC will approve a Cardano ETF any time soon. That will depend on whether it will approve the iShares Ethereum Trust by Blackrock.
Cardano price forecast
Turning to the daily chart, we see that the ADA price peaked at $0.6954 in December last year. The coin formed a double-top pattern near this level. In most cases, this pattern is one of the most bearish ones in the market.
It then pulled back to the key support at $0.4663 last week. It has now bounced back and moved above the 50-day moving average. Therefore, I suspect that Cardano will retreat in the coming days as the Bitcoin ETF hype eases. If this happens, it will likely retest the support at $0.50.
