Cardano Could Rally 25%, Here’s Why

Cardano gained 35% on November 10, and the altcoin remained stable near the $0.65 level. Ethereum’s rival token ADA hit BTC’s all-time high on Wednesday, rising along with Bitcoin, Ethereum, Dogecoin and other leading cryptocurrencies.

Cardano’s on-chain indicators point to a price increase

Cardano (ADA) rallied alongside Bitcoin (BTC) as the largest cryptocurrency hit a new all-time high on November 12. BTC reached a record high of $93,265, while ADA climbed to a six-month high of $0.6599.

Open interest in ADA has increased by 15.51% over the last 24 hours as the altcoin attempts to surpass the March 2024 high of $0.8104. This metric represents open contracts held by Cardano’s derivative investors, a sign of demand and relevance in ADA’s futures markets.

The top three on-chain indicators, active addresses, number of whale transactions and network realized profit/loss, support the Cardano price gain thesis. According to Santiment data, the number of active addresses increased by 42% in November.

During the same time period, the number of whale transactions valued at $100,000 and above peaked at 2,737 on November 10, and large wallet investors remained relatively active throughout November.

Investors’ take of profits fell from a peak of $93 million on November 10 to approximately $21 million on Friday, November 15. Typically, a reduction in profit-taking activities reduces selling pressure on the token, paving the way for gains.

Cardano price, active addresses, number of whale transactions and NPL | Source: Santiment

According to IntoTheBlock data, Cardano’s correlation with Bitcoin is 0.93. Therefore, Cardano’s gains are affected by the situation of Bitcoin and the price trend of the largest cryptocurrency. A correction in Bitcoin could negatively impact Cardano.

Cardano eyes return to March peak at $0.8104 according to technical indicators

Cardano has been trading in a range for about six months, as seen in the daily price chart below. ADA has been in a range of $0.5225 to $0.2756 for the last six months, and Cardano has broken out of its sideways trend, ready to test resistance at the March 2024 high of $0.8104.

A rise towards the $0.8104 level would indicate an upside of around 25% for the altcoin. The next major resistances are the $0.9058 peak in May 2022 and the psychologically important $1 level.

The $1 level could act as a resistance for Cardano in an uptrend. A daily candle close above this level could restore the all-time high of $3 recorded in September 2021.

The moving average convergence divergence indicator flashes green histogram bars above the neutral line. This means that Cardano’s price trend has fundamentally positive momentum and further gains are likely.

The formidable oscillator supports the bullish thesis for Cardano with no signs of reversal on the daily price chart.

ADA/USDT daily price chart | Source: Tradingview.com

Failure to close support at $0.5785 could invalidate the bullish thesis. ADA could find support in this range and move liquidity to $0.5225, the upper end of the range on the daily price chart.

Strategic considerations

Derivatives market data from Coinglass shows that the long/short ratio for Cardano is above 1, with 2.1377 on Binance, 2.06 on OKX exchange, and 2.3434 on Binance’s top trader accounts. A value higher than one indicates that there are more long positions than short positions, and there is greater confidence among investors in making profits in the token in the short term.

Cardano derivatives data analysis | Source: Coinglass

Data from derivatives markets are often used to guide positions in the spot market and are also considered indicators of sentiment among investors.

The fear and greed index for Cardano from Cfgi.io shows “extreme greed”, which is often considered a sell signal or sign of an impending correction. Investors should be careful when adding to long positions on Cardano.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.