Cardano’s [ADA] current trading value stands at 0.996, with a modest 2% increase over the past 24 hours. Nevertheless, trading volumes have decreased by 40%, totaling $1.4 billion, indicating a waning interest in the market.
Despite these recent gains, Cardano’s market capitalization has experienced a 14% decline in under a week, now standing at $35 billion. This suggests a lack of significant buying pressure, with additional volumes essential for a potential market rally.
Setting its sights on the weekly chart, ADA appears poised to make a breakthrough past the $2 mark.
Positive Long-Term Outlook Hints at an Impending Market Surge
ADA’s weekly chart paints a promising picture of a potential surge to $2.47 if historical price trends are anything to go by.
Having recently exited an ascending parallel channel towards the end of last year, ADA finds itself in a consolidation phase, with a resistance point at $1.09 restraining any upward movement.
The current market scenario closely mirrors ADA’s performance back in 2021 when a price surge tapered off following a sharp increase. Following a consolidation period, ADA eventually broke out, delivering a substantial over 200% rise within a fortnight, reaching $2.47.
With the Relative Strength Index (RSI) currently standing at 62, ADA seems to be cooling down after reaching overbought levels. Despite this, the lack of significant seller activity suggests a prevailing bullish sentiment among traders, hinting at a potential market rally.
Furthermore, ADA’s Moving Average Convergence Divergence (MACD) indicator indicates that despite reduced buying volumes, the momentum remains in favor of the bulls.
Increased Network Engagement Could Propel the Anticipated Rally
The Cardano network has witnessed a surge in activity, particularly marked by a rise in the number of active addresses.
According to Santiment, the daily active addresses on the network reached 50,828 earlier this week, signaling heightened network engagement or a spike in trading activities.
Despite the uptick in address registrations, data from DeFiLlama indicated a decline in Cardano’s Total Value Locked (TVL) to $518M. A resurgence in DeFi activities is crucial to sustaining ADA’s long-term upward trajectory.
Short Position Traders Hold Dominance in the Market
Data from Coinglass revealed a notable increase in short positions of ADA within the market. In fact, the Long/Short Ratio for the coin has plummeted to 0.824, marking its lowest point in over a month.
When a large portion of traders adopts short positions, it reflects a pessimistic sentiment prevailing in the market.
However, an influx of short positions could potentially facilitate a market recovery in case of a short squeeze, prompting traders to cover their positions by buying back ADA.