Despite prevailing market bearishness, Cardano [ADA] faced significant losses compared to other top alternative coins. However, investors are advised to exercise patience as ADA appears to be consolidating within a long-term pattern.
A breakout could lead to a surge, potentially enabling ADA to recover its previous losses.
Is Cardano poised for a bullish resurgence?
Recent data from IntoTheBlock indicates that the number of ADA bulls and bears has remained relatively stable over the past week, with a slightly higher number of bears.
This balance may have contributed to ADA’s recent price correction, where the token experienced a decline of over 4% in the last 24 hours, trading at $0.3438.
Following the price correction, only 12% of the total ADA addresses, equivalent to 563.8K addresses, remained profitable.
Nevertheless, there are positive signs for a potential recovery on the horizon. Notably, the World Of Charts, a respected cryptocurrency analyst, recently drew attention to a significant development—a bullish pattern spanning several months visible on ADA’s price chart.
This pattern first emerged towards the end of December 2023, with ADA’s price subsequently consolidating within its confines.
Currently, the consolidation range is narrowing as the token attempts to break out, raising the possibility of ADA’s price exceeding $0.5 in the near future.
If the uptrend persists, ADA could potentially witness a substantial 90% bull rally.
Furthermore, as reported by CryptoCrypto, ADA seems to be following a pattern observed back in 2020, hinting at a potential surge commencing in mid-November, coinciding with the U.S. elections.
Key Metrics Indicating Potential Breakout
CryptoCrypto sought to evaluate Cardano’s on-chain data to identify any signals pointing towards a reversal in trends, facilitating a potential breakout for ADA.
Analysis of Santiment’s data revealed a double-digit drop in ADA’s trading volume coinciding with its price decline. Additionally, the open interest showed a similar downtrend.
When both trading volume and open interest decrease alongside the asset’s price, it often signifies high chances of a bullish trend reversal.
Moreover, Cardano’s whale activity remained notable, as evidenced by the consistent count of whale transactions over the past week.
While examining ADA’s daily chart through technical indicators, a notable observation was made regarding the Bollinger Bands—ADA was testing the resistance of its 20-day SMA at the time.
Although the token was experiencing lower volatility, a breakout above the mentioned resistance level could potentially trigger a bullish rally.