Cardano eyes trend reversal as Coinbase launches wrapped ADA on Base

Cardano may be gearing up for a trend reversal, fueled by Coinbase’s latest move to launch wrapped ADA on the Ethereum layer 2 network Base. 

On June 24, the crypto exchange announced the launch of cbADA, a wrapped version of Cardano (ADA) available on Base. Each cbADA token is backed 1:1 by ADA held in Coinbase custody, with public proof-of-reserves. 

The cbADA rollout increases the utility of ADA and links it to the larger crypto market by enabling ADA holders to lend, borrow, and provide liquidity on decentralized finance protocols outside of the Cardano ecosystem.

Holders will be able to use ADA across Ethereum-based DeFi platforms like Uniswap (UNI), PancakeSwap (CAKE), and Aerodrome Finance (AERO), a feature that is not natively available on Cardano.

Another boost might come from Cardano’s upcoming privacy-focused sidechain, Midnight. Midnight is preparing to release its governance token, NIGHT, through a huge airdrop called the Glacier Drop.

Users must interact with the Cardano network to claim their NIGHT airdrops, which is likely to increase short-term on-chain activity. Cardano’s ecosystem may continue to expand as NIGHT starts trading and powers privacy apps on Midnight.

As of this writing, ADA is trading at $0.571, down 2% over the last day and almost 24% over the last month. Daily trading volume for ADA has slipped to $586 million, down 1.7%, while open interest in derivatives has dropped 2.15% to $724.3 million, according to Coinglass data. A drop in open interest usually indicates reduced speculative positioning as traders lessen their exposure or leave the market entirely, 

ADA continues its downward trend on the charts. At 36, the relative strength index is almost in oversold territory, but has began trending upwards. Bollinger Bands have narrowed, and price action is trying to bounce from the lower band. While the momentum oscillator has turned positive, the moving average convergence divergence displays a slight bearish divergence. 

Caution is indicated by ADA trading below both its 50- and 200-day moving averages. If cbADA gains traction and Midnight’s airdrop boosts activity, ADA might test the $0.60–$0.62 resistance range. A move toward $0.70 might be possible if that level is broken. However, if ADA is unable to hold onto $0.55, the next significant support is at $0.52.