Cardano’s [ADA] next move hinges on key price level: Here’s why

Cardano [ADA] is catching the eye of cryptocurrency enthusiasts due to its significant price decline within the last 24 hours.

With a 13% drop, ADA has now reached a pivotal point where there has been a notable surge in participation from traders and investors, resulting in a noticeable uptick in trading volume.

The Current Price Trend of ADA

Currently, ADA is trading around $0.665, experiencing a 90% increase in trading volume in the past day. Nevertheless, this upsurge in trading volume does not necessarily signify a price surge.

Such upticks commonly happen when an asset breaks out or breaks down from a price pattern. Substantial volatility pushes traders and investors to either close their positions or sell off assets to lock in profits.

Analysis of Cardano’s Price Action and the Next Level

As per CryptoCrypto’s technical breakdown, ADA appears to be shaping a bullish double-bottom pattern on the daily chart. Despite this, the recent price dip has pushed the asset to a critical support level of $0.65.

This support level has a solid track record of price reversals, further supporting the bullish outlook.

Furthermore, ADA’s technical indicators are showing a bullish divergence, indicating a significant potential upside.

Historically, if ADA maintains its position above $0.65, there is a high likelihood that it could surge by 25% to hit $0.85 in the upcoming period.

However, if ADA breaches the $0.65 level, there is a possibility of a 30% drop to reach $0.45.

An Outflow of $8 million worth of ADA

Despite the continuous price decline, long-term holders seem to be accumulating ADA tokens according to on-chain analytics firm Coinglass.

Data from Spot Inflows/Outflows shows that exchanges have observed an outflow of more than $8 million worth of ADA tokens in the last 24 hours.

Even in a market scenario where prices are on a downward trend, exchange outflows suggest potential accumulation, which could generate buying pressure and propel further upward momentum.

Traders’ $17 million Short Position on ADA

Meanwhile, intraday traders seem to be aligning with the prevailing market sentiment, favoring short positions, as per Coinglass.

Currently, short positions dominate, while long traders seem to have weakened.

Data indicates that the major levels for liquidation are at $0.634 on the lower end and $0.708 on the upper end, with traders showing significant leverage at these levels.

If the market sentiment remains constant and the price drops to $0.634, almost $3.08 million worth of long positions would be liquidated.

Conversely, if sentiment changes and the price rises to $0.708, around $17.30 million worth of short positions will face liquidation.

Based on this on-chain metric, it appears that short traders still maintain a pessimistic view on ADA’s price recovery in the near term, leading to the accumulation of $17.30 million in short positions.