After hitting a 50-day low of $0.43 on January 23, Cardano’s price has experienced a rapid recovery, reaching $0.54. As the crypto market rebounds from the sell-the-news cycle following two weeks of active Bitcoin ETF trading, Layer-1 altcoins, including Solana (SOL), Avalanche (AVAX), and Cardano (ADA), are leading the resurgence.
While Avalanche and Solana collectively added $14.9 billion in market capitalization with gains of 24.1% and 20.2%, respectively, Cardano trails with a 16.2% increase, contributing to a $2.2 billion market cap over the past week.
Derivative market data suggests a potential breakout for ADA, as evidenced by an 800% spike in its funding rate. The funding rate, tracked by CoinGlass, measures changes in fees paid by futures contract holders, indicating bullish sentiment when positive. The surge in Cardano’s funding rate from an average of 0.01% to 0.09% on January 30 suggests significant bullish bets on an imminent ADA price breakout.
Historical data trends show that ADA has often experienced upward movement when its funding rate records comparable spikes. Traders are seemingly optimistic about ADA catching up to the superior performance of AVAX and SOL.
From an on-chain perspective, the current Cardano price uptrend is attributed to bullish headwinds in the altcoin markets. The Parabolic Stop and Reverse (SAR) technical indicator supports this prediction, indicating growing bullish momentum when the SAR dot points below the current price.
The bullish scenario envisions initial resistance at $0.55, but a decisive breakout could trigger margin call triggers and short squeeze alerts, potentially pushing ADA prices above $0.65 for the first time in 2024. On the downside, bears may attempt to invalidate this forecast with a downswing below $0.40. However, the SAR chart suggests formidable support at $0.45, likely leading to price bounces as traders react to potential losses.
As Cardano’s funding rate and on-chain indicators align with bullish sentiments, traders are closely watching the $0.60 resistance level, anticipating further appreciation in ADA prices amid the ongoing altcoin rally.
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