It’s been an ugly few days for ADA, the cryptocurrency that powers the Cardano blockchain, a decentralized smart-contract-enabled layer-1 protocol.
ADA dropped another near 7% on Friday to hit $0.30 per token and is eyeing a retest of March’s lows.
Losses on the week now stand at a staggering more than 20%, which would mark the cryptocurrency’s worst week in over two years.
And have suddenly become much more bearish.
The sharp decline, which has seen decisively lose its grip on its 200-Day Moving Average (which had previously been acting as support), could be the start of a larger move back towards late-2022 lows in the $0.24 area, some technicians think.
SEC’s Security Label Delivers Dagger Blow to ADA
The catalyst for this week’s sharp decline was a double whammy of lawsuits by the US Securities and Exchange Commission (SEC) versus Binance and Coinbase unveiled earlier this week.
Both cryptocurrencies stand accused operating as unregistered securities exchanges in the US and one of the securities that they allegedly offered to the US public is .
In other words, the , and is pushing to have it regulated as such in the US.
This is a catastrophe for ADA’s price outlook, hence this week’s sharp decline.
That’s because, if ADA is legally viewed as a security, only licensed securities dealers will be able to offer the asset to investors in the US.
Cryptocurrency exchanges that wanted to continue offering ADA would be forced to go through a hugely expensive compliance process in order to list to token in the US.
And even though the lawsuits versus Coinbase and Binance are yet to play out, cryptocurrency exchanges operating in the US may choose to remove ADA from their list of offerings in order to reduce the risk that they too are acting as unlicensed securities exchanges.
ADA liquidity and demand is now expected to experience a sharp decline in the world’s most important market, the US.
And we are already seeing this have a big impact on the price.
Research and Development Firm Input Output Hong Kong Responds to SEC
Input Output Hong Kong (IOHK), the research and development company behind the development of the Cardano blockchain, issued a defiant in response to the SEC’s labelling of ADA as a security.
The SEC’s “filing contains numerous factual inaccuracies and will not impact IOG’s operations in any way,” the statement read.
“Under no circumstances is ADA a security under U.S. securities laws”, IOHK noted, adding that “understanding how decentralized blockchains operate is a fundamental component in creating responsible legislation”.
“Regulation through enforcement action does not provide either the clarity or certainty to which both the blockchain industry and consumers are entitled”.
Separately, the CEO of the Cardano Foundation, a non-profit tasked with supporting the growth of the Cardano ecosystem, also issued a statement outlining his disagreement with the SEC’s recent classification.
Cardano (ADA) Alternatives to Consider
Investors should always be on the lookout to diversify their crypto holdings.
One high-risk-high-reward investment strategy that some investors might want to consider is getting involved in crypto presales.
This is where investors buy the tokens of up-start crypto projects to help fund their development.
These tokens are nearly always sold very cheap and there is a long history of presales delivering huge exponential gains to early investors.
Many of these projects have fantastic teams behind them and a great vision to deliver a revolutionary crypto application/platform.
If an investor can identify such projects, the risk/reward of their presale investment is very good.
The team at Cryptonews spends a lot of time combing through presale projects to help investors out.
Here is a list of 15 of what the project deems as the best crypto presales of 2023.