Cardano (ADA) has experienced a swift recovery, surging to $0.54 after reaching a 50-day low of $0.43 on January 23rd. This resurgence has sparked speculation among traders, who are betting big on further gains. As the global crypto market capitalization rebounded by $180 billion in the past week, optimism has spread throughout the altcoin markets. Prominent Layer-1 coins such as Solana (SOL), Avalanche (AVAX), and Cardano have been leading the rally.
During the recovery phase, Solana and Avalanche have collectively added $14.9 billion in market capitalization between January 23rd and January 30th, with gains of 24.1% and 20.2% respectively. However, Cardano has lagged slightly behind with a 16% jump. Despite this, vital derivative market data trends suggest that Cardano could be the next to experience a major breakout.
Derivatives traders have been placing unusually large bullish bets on an imminent ADA price breakout. The funding rates metric, which tracks changes in fees paid by futures contract holders, indicates a significant increase in positive funding rates for Cardano. This rise in funding rates often occurs when speculative traders rapidly react to a bullish catalyst. With the bullish momentum observed in rival layer-1 altcoins, traders are betting big on Cardano catching up to the performance of AVAX and SOL.
Analyzing the historical data trend, whenever Cardano’s funding rate has recorded comparable spikes, ADA price has often experienced a leg-up. This suggests that the current Cardano price uptrend may be driven by bullish headwinds in the altcoin markets, and the rising funding rates could propel it even further.
Technical Indicators
The Parabolic Stop and Reverse (SAR) technical indicator adds further weight to the bullish prediction for Cardano’s price. When the Parabolic SAR dot points below the current price of an asset, it indicates a growing bullish momentum. In the case of ADA, the Parabolic SAR dot is pointing to $0.45 while the current price stands at $0.52, aligning with the bullish on-chain prediction. This could be interpreted as a buying opportunity or a signal to go long in the derivatives markets, anticipating further appreciation of Cardano’s price.
Possible Scenarios
If the predicted scenario materializes, initial resistance could be encountered at the $0.55 milestone price. However, a decisive breakout beyond this level could trigger margin calls and short squeeze alerts, potentially propelling ADA prices above $0.65 for the first time in 2024. On the other hand, the bears could invalidate this optimistic price forecast if there is a downswing below $0.40. Nevertheless, taking into account the support at $0.45 indicated by the SAR chart, a significant decline may prove to be challenging.
Cardano’s recent recovery and the bullish sentiment surrounding the altcoin markets have led to increased speculation about a potential major breakout for ADA’s price. Derivatives traders are placing large bullish bets on Cardano, hoping to capitalize on its upward momentum. The historical data trend and technical indicators further support the notion of an imminent breakout. However, as with any investment, there are risks involved, and the market can be unpredictable. Traders and investors should exercise caution and conduct thorough research before making any decisions.
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