Price Analysis of Cardano (ADA): Heading to New Highs or Returning to the Abyss?

4 weeks ago 17

Cardano (ADA) has recently resurrected from a tremendous bear market, with its price reaching the highest values since April 2022.

Now the cryptocurrency seems to be resting around the 1 dollar area, waiting to discover what its next move will be.

There are those who say that we will surpass the previous all-time highs at 3 dollars and those who think that we will return to a bear phase.

In the meantime, the on-chain and derivatives market indicators highlight a bull scenario.

Price Analysis of Cardano (ADA): What Will Be the Next Move for the Crypto?

Cardano (ADA), one of the most loved/hated assets in the crypto world, has recorded an excellent price performance in the last 3 weeks, printing a +200%.

After going through a very long bear phase, the cryptocurrency is back to printing green candles, bringing excitement to its holders.

In detail, the prices have gone from 0.33 dollars at the beginning of November to the local maximum of 1.15 dollars, returning to its highest value since April 2022.

Simultaneously, we have witnessed a strong increase in spot trading volumes, more than 5 times greater compared to the previous weeks.

Now the price of Cardano is exactly at 1 dollar, slightly down after the pullback last weekend, awaiting the next chart move.

The most plausible scenarios at the moment seem to be three: the first sees the breakout upwards of 1.2 dollars and the continuation of the trend towards new price highs.

The second, on the other hand, sees Cardano marking a lower-high on the daily chart, building a reversal structure.

Finally, the third one hypothesizes a brief retracement to the price of 0.90 dollars with subsequent lateralization to give breath to the trend.

It’s difficult to try to predict the trend of such a controversial asset as Cardano, which historically grows quickly during each bull market and plummets during bear phases.

At this moment we can say that the odds are in favor of the bull, judging from the overall outlook of the crypto market and the price action of the coin.

From the analysis of exchange flows, it also emerges that the whales are withdrawing ADA from centralized platforms, a sign of a potential bull in sight.

Attention, however, to possible signs of exhaustion of the bull force, which could trigger a violent sell-off.

The prices are far from the EMA 50, the RSI is in overbought territory and the volumes decrease while the prices increase.

JUST IN: Over $100m worth of Cardano $ADA has been withdrawn from exchanges. pic.twitter.com/PXoDYT0Wv8

— TapTools (@TapTools) November 26, 2024

On-chain data from the Cardano blockchain suggest a strong bull signal

If graphical analysis is not very helpful for studying the behavior of Cardano in terms of price, we can take a look at the on-chain data.

In the last month, active addresses in the network have grown generously, highlighting the positive period of the project.

At the same time, the transactions advanced by the network also saw a positive leap, testifying to the increase in network activity.

These data resulted in a strong increase in the TVL of Cardano in the month of November, with the sum of locked capital reaching 590 million dollars.

Let’s talk about the highest value ever recorded by the cryptographic network in its history, according to the data shown by DefilLama.

Furthermore, according to the “in/out the money” chart provided by IntoTheBlock, it emerges that currently about 66% of ADA holders are in profit (unrealized).

This latest data is very important because it shows the profit fabric of investors who are currently betting on Cardano.

The majority of them bought the crypto at a lower price than the current one, while a small minority purchased before April 2021.

It is likely that the share of holders in profit will increase again before the end of Cardano’s bull phase. In the meantime, it is unlikely that those sitting at a loss will decide to liquidate their investment right now and will likely wait for better times.

Other encouraging signals come from the correlation index with Bitcoin, set at 0.94, suggesting an easy continuation of the rally along with the market’s largest currency.

Overall, the on-chain data on Cardano are bullish and suggest another bullish leg up in price from now until the end of the year.

Open interest and funding rate sky-high: great attention on the price of ADA

In support of the on-chain metrics, we also provide some data from the derivatives markets that can help understand the price dynamics of Cardano.

According to Coinglass, investors seem particularly attracted to the cryptocurrency ADA and are trading it with large bull and bear bets.

The overall open interest on the currency is at its highest since September 2021, with about 850 million dollars at stake on speculative positions.

Simultaneously with the increase in spot volumes, there has also been a rise in participation on futures exchanges. Trades have skyrocketed in just 3 weeks, highlighting the excellent momentum of the crypto.

This is an encouraging signal that makes us understand how the stock is under the lens of the traders.

Very interesting to highlight that in parallel with the evolution of the open interest, there has also been an increase in the funding rate.

Currently, the funding rate for the capital request is 0.038% (paid every 8 hours), after being below 0.01% for months.

This means that the same traders who have raised the stakes are using greater financial leverage to give a boost to their profits.

This detail highlights the bullish outlook for the price of Cardano, which should still be correlated with the risks of over-leveraging that are taken.

If the demand for leverage were to increase further and go above 0.05%, it could be a worrying signal of excessive confidence.