Cardano’s ADA has shifted its trajectory from bearish to bullish in response to the overall recovery observed in the cryptocurrency market. Over the past day, ADA has surged by approximately 10%, reaching $0.362 at the current moment.
This surge in price has triggered a notable increase in short liquidations for ADA, marking the highest level seen in the past two months.
Data obtained from Coinglass reveals that around $868,000 worth of open positions related to ADA were liquidated, with short liquidations accounting for $608,000 of that total.
Concurrently, funding rates have experienced a significant uptick, rising from 0.0008% to 0.0093% currently.
This rise indicates a growing trend among derivative traders in initiating new long positions on Cardano. The increase in long positions signals an optimistic outlook toward ADA’s future performance among traders.
The positive sentiment detected in the derivatives market aligns with the bullish signals evident on Cardano’s one-day chart.
Examining Cardano’s Double-Bottom Formation
Cardano has established a double-bottom pattern, typically a precursor to a bullish reversal. This pattern suggests that ADA has found robust support, indicating a probable upward momentum in the near future.
ADA has successfully tested the support at the neckline of this double-bottom pattern at $0.364. If this bullish reversal maintains its course, ADA is positioned for an 11% upsurge toward the subsequent resistance level at $0.404.
An advancement towards this resistance level would be feasible with an accompanying rise in trading volumes. The on-balance volume (OBV) indicator has surged on the one-day chart, signifying an increase in buying pressure alongside the price surge.
The Relative Strength Index (RSI) further supports the potential for a rally towards the target price. The indicator has climbed to 55 and crossed above the signal line, confirming the presence of bullish momentum.
With these bullish indicators coinciding, the path towards $0.404 appears increasingly probable for Cardano.
Cardano MVRV Ratio Encounters a Setback
The Cardano Market Value to Realized Value (MVRV) ratio has notably declined over the last four days, dropping from 0.723 to 0.661 at the current moment.
A diminishing MVRV ratio implies that ADA’s market value falls below the realized value, indicating that present ADA buyers are purchasing at an undervalued price.
Nevertheless, a declining MVRV ratio could also signal a waning investor confidence in the ADA rally. Hence, additional buyer support is essential to validate the ongoing uptrend.
Can Cardano Sustain its Performance Gains?
Following the recent surge, ADA’s market capitalization has surged to $12.70 billion according to CoinMarketCap, surpassing Toncoin [TON]. In just 24 hours, Cardano has added over $1 billion to its market capitalization.
A resurgence into the top-ten cryptocurrency list could reignite positive investor sentiment, bolstering the prospects for further gains.
However, the recent uptrend in ADA appears to be contingent on the prevailing market sentiment. Therefore, investors should remain vigilant for any shifts in market sentiment that could validate the continuation of the uptrend.