Following a prolonged period of correction earlier this year, Cardano [ADA] has witnessed a substantial resurgence in its price. After reaching its peak above $0.77 in January, ADA experienced a notable downtrend.
However, over the past week, the cryptocurrency has surged by more than 15%, with this bullish trend continuing in the last 24 hours. Currently, ADA is trading at $0.41, marking a 2.6% increase.
Potential Upside for ADA
The recent price surge has captured the attention of the Cardano community, prompting analysts to debate whether this upswing is sustainable or merely a brief bounce.
An in-depth analysis of ADA’s weekly price chart reveals a significant bullish signal – a bullish engulfing candlestick pattern. This pattern, following an inverted dragonfly doji, is often seen as a strong reversal indicator, suggesting a potential end to the downward correction and the start of a significant upward price movement.
This pattern hinting at sustained upward momentum implies the likelihood of a prolonged bullish trend for ADA.
Supporting Factors from Fundamentals
While the technical outlook favors a continuation of ADA’s rally, it’s crucial to validate these signals with underlying market fundamentals to confirm that this bullish momentum is substantiated by solid factors.
One key metric to consider is ADA’s retail interest, measured by the number of active addresses associated with the cryptocurrency.
According to data from Santiment, ADA’s active addresses have shown a recent increase. Despite peaking at over 150,000 in a previous month and then dropping to 120,000, the number of active addresses has now surpassed 130,000 currently, indicating renewed retail interest in ADA and a potential rise in trading volume and demand.
Enhanced active addresses often correlate with heightened buying pressure, potentially leading to positive price movements for the asset.
If this trend persists, it could reinforce ADA’s current upward trajectory and support the potential for a sustained bull run.
Another significant factor contributing to ADA’s bullish outlook is open interest, reflecting the total number of open contracts in the Futures market.
Data from Coinglass reveals that ADA’s Open Interest has climbed by 6.77%, reaching $255.04 million, accompanied by a 57.87% surge in Open Interest volume, valued at $442.38 million currently.
An increase in Open Interest coupled with rising prices typically signifies trader confidence, indicating inflow of new capital into the market. This scenario aligns with the likelihood of continued price growth as additional capital entering ADA futures contracts could amplify price fluctuations and extend the ongoing rally.