Cardano blockchain's native asset, ADA, reached a new tape high on Monday equally investors pinned hopes on an upcoming smart contracts feature that expects to boost the cryptocurrency's adoption.

The ADA/USD substitution rate topped out at $two.899 effectually nine:00 am UTC, raising anticipations that it would easily close above $iii in the coming sessions.

Many analysts, including pseudonymous chartist PostyXBT, noted that the Cardano token had entered a "price discovery mode." Meanwhile, David Gokhshtein hinted that ADA/USD might continue its balderdash run until Sep. 12, the day Cardano is going to integrate a smart contracts characteristic to its blockchain via the "Alonzo" upgrade.

In detail, the Alonzo upgrade introduces a native smart contracts development linguistic communication called Plutus to the Cardano ecosystem. Plutus is already bachelor for testing and brings functional programming to smart contract creation to everyday users.

As a result, ADA bulls anticipate the token's adoption to boom in the sessions alee as Cardano attracts decentralized application developers — operating in the emerging decentralized finance and nonfungible token sectors — to its smart contracts ecosystem.

Overbought risks

But Cardano's technical indicators predict a short-term shock, something that might have the ADA/USD corrected lower by as much as 40% despite maintaining its long-term bullish outlook.

The Cardano token'southward daily relative forcefulness alphabetize (RSI) has ventured deeper into overbought territory, at effectually 83. Traders consider an RSI reading above 70 equally overvalued. As a result, it prompts them to sell the asset to secure maximum profits.

ADA/USD daily nautical chart featuring RSI correction fractal. Source: TradingView

For instance, a run-upward in ADA/USD rates in the outset quarter of 2021 pushed its RSI reading above 90. Later, the pair started consolidating sideways while maintaining support virtually its 50-twenty-four hour period exponential moving average (l-24-hour interval EMA; the scarlet wave).

Related: Cardano defies Peter Brandt's 90% crash warning, ADA price doubles to new high

ADA's price now sits atop 114% calendar month-to-appointment and 1,511% year-to-date profits. At the same fourth dimension, an oversold RSI pictures an acting turn a profit-taking scenario. And then if the Q1/2021 fractal repeats, ADA's next line of support comes to be virtually its fifty-day EMA at $ane.73, well-nigh xl% beneath the current prices of $two.83.

But a correction won't necessarily exhaust Cardano's long-term bullish outlook. Given the potential success of its Alonzo upgrade, the project could finish upwardly alluring more speculative upside bids for its ADA token. As a event, the ADA/USD exchange rate expects to remain in price discovery mode.

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