After reaching $1.3, Cardano [ADA] has faced challenges in maintaining an upward trajectory, leading to a significant downward trend that has intensified in the last week. During this time, ADA saw a decline, hitting a low of $0.77.
Currently, Cardano is trading at $0.9013, reflecting an 8.77% decrease over the last 24 hours and a 14.45% drop on a weekly basis.
The recent downturn has sparked discussions within the Cardano community, with some analysts expressing optimism. Renowned crypto analyst Ali Martinez has suggested a potential surge to $6 by drawing parallels with previous market cycles.
Assessing Market Sentiment
In his assessment, Martinez points out that Cardano appears to be following a similar pattern to its historical cycles.
He notes that in 2020, the first major correction after a bullish rally occurred around the same time as the current situation. This correction is typically followed by a period of market consolidation and potential growth.
During the 2020 rally, ADA surged from $0.088 to $0.190 before retracing to $0.12. Subsequently, a strong recovery ensued, propelling Cardano from $0.12 in December 2020 to $1.02 by February 2024, representing a remarkable 750% increase.
Based on historical data, there is a possibility of a significant price rally for Cardano post the ongoing correction.
Interpreting ADA’s Chart Trends
While Martinez’s analysis offers an optimistic view, other market signals paint a different picture, particularly concerning Cardano’s on-chain metrics which have declined recently.
For instance, Cardano’s Price DAA divergence has consistently been negative in the past week, indicating that the current ADA price is not supported by on-chain activities and growth within the ecosystem.
This trend is particularly evident among large holders as large transactions have decreased significantly, reaching a monthly low.
Furthermore, Cardano’s NVT ratio has spiked from 9.17 to 38.12, suggesting that the market valuation is outpacing transactional volume, indicating potential price inflation driven by speculation rather than organic growth.
For sustainable price appreciation, Cardano needs to witness a proportional increase in active addresses, transactions, and overall on-chain engagement.
Considering the current market conditions, it is likely that ADA’s corrective phase is not yet complete, with a potential short-term drop to $0.85 before a possible trend reversal.
In the event of a trend reversal, Cardano would need to surpass resistance levels at $1.2, $1.6, $1.8, and $2.4 before approaching the $6 target.