Cardano (ADA) hit a three-week high earlier this week, leading some investors to believe that the trend has reversed. In fact, the bullish momentum is mainly associated with the anticipation of the upcoming decentralized exchange (DEX) SundaeSwap.

ADA price surged nearly 12% on Jan. 17 to hit an intraday high of $1.6 a day after SundaeSwap notification launched a “fully functional beta”. However, the uptrend is also part of a broader recovery trend that has seen ADA climb nearly 50% in just seven days.

Daily Frame ADA/USD price chart | Source: TradingView

Notably, the ADA rally started almost in sync with similar retracement moves in the broader crypto market. This includes Bitcoin, which abruptly changed course on Jan. 10 after the price fell as low as $39,650. At press time, bitcoin price is trading at $42,222.

ADA initially tracked a trend reversal in the crypto market, but returned to its own bullish path after being inspired by the excitement surrounding the launch of SundaeSwap on Jan. 20. Therefore, within 48 hours, ADA emerged as one of the top 10 performing cryptocurrencies by capitalization.

Top 10 crypto activity in the last 48 hours | Source: Messari

What Caused SundaeSwap to Trigger a Price Increase on ADA?

Official Announcement debut SundaeSwap contains hints of greater demand for ADA going forward, and this is often a bullish signal for investors.

“The moment we’ve all been waiting for has finally arrived! We are very excited and proud to announce that SundaeSwap and ISO will be launching on Thursday evening January 20th (EST)!”

SundaeSwap also presented its native token SUNDAE and discussed three ways to distribute it to users: through an initial round of staking (ISO), yield farming, and exchange-based conversions.

Discussing the ISO round, SundaeSwap stated that they will spread 5% of the total supply of SUNDAE over five epochs. Each epoch represents a five-day rewards cycle in which users deposit their ADA into a stake pool.

“If you want to guarantee eligibility for all five ISO bonus rounds, you must ADA with qualifying SPOs (Stake Pool Operators) by 21:45 UTC on January 25 (i.e. 4:45 p.m. 26). /1 according to Synthetic Teamese time).

Your reward is calculated based on the snapshot taken at that time and simultaneously at each subsequent epoch boundary.”

SundaeSwap’s snapshot calendar | Source: SundaeSwap

Meanwhile, as part of the profit farming program, SundaeSwap has added four more ADA-based liquidity pools: SUNDAE/ADA, LQ/ADA, WMT/ADA, and CARDS/ADA. SundaeSwap also allocates 500,000 SUNDAE per day from January to June.

ADA heading to $2?

SundaeSwap’s positive factor pushed ADA towards its 100-day exponential moving average (100-day EMA; green wave) near $1.57.

Daily frame ADA/USD price chart with 100-day EMA resistance | Source: TradingView

Other bullish signals are also coming from the preliminary launch of Pavio, which takes over Cardano’s first Metaverse role.

Pavio is a Decentraland-like virtual land startup with around 100,000 properties, each coined as a single NFT with coordinates. The launch of Metaverse in the crypto space in recent months and the involvement of Cardano could fuel demand for ADA even further.

This increases the likelihood of ADA closing above the 100-day EMA resistance wave, shifting the next upside target to the 200-day EMA near $2.

Conversely, the risk of a broader crypto market crash due to cuts in the US Federal Reserve’s (Fed) asset purchase program this year could weigh on the ADA’s bullish setup to some extent.

While ADA is far from returning to all-time highs (ATHs), the prospect of more scalability as part of its 2022 roadmap explains why investors appear to be on the mend.

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