Cardano’s [ADA] recent surge of 14% within a span of four days signals a strong comeback, creating a buzz in the market. Amid speculation around a potential hype cycle, ADA seems to be gaining momentum and entering a notable FOMO phase.
Even though ADA is currently trading at 75% below its all-time high, is there a possibility of a resurgence similar to the 2021 rally?
Evaluating the Chances
Similar to many other digital assets, Cardano is experiencing challenges in maintaining its post-rally levels, struggling to sustain essential psychological thresholds. The significant price fluctuations have left investors cautious, portraying ADA as a high-risk, high-reward investment. Following its decline from $1, ADA has witnessed three successive lower troughs, signifying a prevailing downtrend.
Recent data reveals that over 70 million ADA tokens were sold off by major holders in the past 96 hours, heightening concerns about breaching the crucial support range between $0.70 and $0.65.
The sudden offloading of tokens indicates that the recent surge in ADA’s value could be driven by hype, susceptible to rapid market manipulation and profit-taking activities. Although a period of consolidation might pave the way for a bullish upturn mirroring the 2021 spike where ADA hit $3.10, marking an impressive 630% surge year-to-date.
Nonetheless, the evolving market sentiment has introduced heightened uncertainty, presenting Cardano as a volatile entity, rendering ADA’s future trajectory unpredictable.
Future Prospects for Cardano
Given Cardano’s elevated volatility, it remains a speculative endeavor in the present landscape. While the ADA/BTC pair exhibits some signs of easing pressure, it is yet to approach the previous peaks required for a substantial recovery.
Moreover, a significant 10x leveraged liquidity pool at $11.60 faces potential risks, especially as ADA hovers a mere 12% above the critical $0.69 threshold.
With such high stakes, a repetition of the remarkable 2021 rally appears distant. To reignite the momentum and reach $1, ADA must hold its current levels steadfastly.
Otherwise, amidst considerable sell-offs, extreme market fluctuations, and potential long positions liquidation, the altcoin might be on the brink of establishing fresh support levels on the price charts.