TLDR
- Cardano (ADA) is trading around $0.74 after recovering over 4% this week
- Long-to-short ratio has reached 1.15, the highest level in a month, indicating bullish sentiment
- Stablecoin market cap on Cardano hit an all-time high of $30.77 million
- Technical analysis suggests a potential 13% gain if ADA breaks above key resistance levels
- Exchange outflows show $13.75 million worth of ADA tokens moved off exchanges in 24 hours
Current Market Position
Cardano’s price is hovering around $0.74 on Thursday after a recovery of over 4% so far this week. The cryptocurrency has been consolidating between $0.69 and $0.75 for several weeks now, creating a tight trading range for investors.
At press time, ADA is trading near $0.742, with a modest price increase of over 0.25% in the past 24 hours. Trading volume has dropped by 18% during this period, showing that many traders remain cautious about making moves.
The consolidation phase has featured several fakeouts, making it harder for traders to determine the next direction. This has created a neutral market stance as ADA tests the upper boundary of its consolidation range.
Bullish Indicators Emerging
On-chain data is painting a bullish picture for Cardano. According to Coinglass, the long-to-short ratio for ADA has reached 1.15, the highest level in over a month. This ratio being above one shows more traders are betting on price increases than decreases.
Another positive sign is the growing stablecoin market capitalization on Cardano. It reached a new all-time high of $30.77 million on Monday, based on DefiLlama data. This rise points to increasing utility and adoption of Decentralized Finance on the Cardano network.
The expanding stablecoin presence suggests users are finding more ways to use the Cardano ecosystem. This broader adoption could serve as a foundation for price growth in the coming weeks.
Exchange data shows an outflow of $13.75 million worth of ADA tokens in the past 24 hours. These outflows from exchanges during weak market sentiment can reduce selling pressure and potentially trigger upward price movement.
This movement of tokens away from exchanges often indicates that investors are moving assets to private wallets for longer-term holding. It may signal accumulation by whales and long-term investors who remain optimistic about Cardano’s future.
Technical Analysis Outlook
Cardano’s price faced rejection around its 50-day Exponential Moving Average of $0.77 on Wednesday and declined 2.16%. This level roughly coincided with the weekly resistance at $0.74, creating a key resistance zone.
If ADA breaks above its weekly resistance and closes above $0.77, it could extend its rally by 13% from current levels. This would put the next target at around $0.83 to $0.85, based on technical projections.
The Relative Strength Index on the daily chart reads 49 and is pointing upward toward the neutral level of 50. This indicates fading bearish momentum in the market.
For the bullish momentum to continue, the RSI needs to move above its neutral level of 50. The Moving Average Convergence Divergence indicator on the daily chart showed a bullish crossover on Tuesday, giving a buy signal.
The Bollinger Bands on the 12-hour timeframe appear to be squeezing. This technical pattern often signals an upcoming period of increased volatility, which could lead to either an upside or downside breakout.
Current resistance comes from both the upper boundary at $0.75 and the 200 Exponential Moving Average on the daily timeframe. These levels have consistently limited upward price movement in recent weeks.
Cautionary Signals
Despite the positive outlook from on-chain metrics and technical analysis, traders should remain cautious. The Santiment Age Consumed metric shows a spike, indicating movement from dormant wallets.
When previously inactive wallets start moving tokens, it can sometimes lead to increased selling pressure. This activity from dormant wallets could potentially drive Cardano’s price lower if these holders decide to sell.
The recent 18% drop in trading volume also suggests hesitation among market participants. Lower volumes can make price movements less stable and more prone to manipulation.
The multiple fakeouts during the consolidation period should also make traders wary. False breakouts have become common in ADA’s recent price action, adding to market uncertainty.
At this point, the $0.76 level remains critical for confirming a genuine bullish breakout. A daily close above this threshold would be needed to confirm the potential 13% rally that technical analysts are projecting.
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