Cardano (ADA) has experienced a swift recovery in price, bouncing back to $0.54 after hitting a 50-day low of $0.43 on January 23rd. This resurgence has led speculative traders to bet big on further gains. After enduring a sell-off that caused the global crypto market capitalization to shrink by over $270 billion between January 11th and January 23rd, the market has entered a recovery phase, instilling optimism across altcoin markets. Layer-1 coins like Solana (SOL), Avalanche (AVAX), and Cardano have been at the forefront of this rally, with Avalanche and Solana collectively adding $14.9 billion in market capitalization between January 23rd and January 30th. However, while Cardano has seen a respectable 16.2% increase in market cap to reach $2.2 billion, derivatives market data indicates that ADA price may be poised for a major breakout.
Recent data from CoinGlass’s funding rates metric, which tracks changes in fees paid by futures contract holders, suggests that there is an unusually large number of bullish bets on an imminent ADA price breakout. Positive funding rates indicate that long position holders are paying short traders to keep their positions open, indicating an anticipation of price increases and larger profits. The surge in Cardano’s open-interest weighted funding rate, rising 800% to 0.09% on January 30th, supports this trend. Notably, this sharp increase in positive funding rate often occurs when speculative traders react rapidly to a bullish catalyst. With rival layer-1 altcoin markets seeing dominant bullish momentum, this could indicate that traders are betting big on Cardano’s price catching up to the superior performance of AVAX and SOL.
Historical data trends also support the notion of a potential ADA price breakout. Previous instances of comparable spikes in Cardano’s funding rate have often led to a surge in price. From an on-chain perspective, Cardano’s current price uptrend can be attributed to the bullish headwinds surrounding altcoin markets. Coupled with the rising funding rates, this could propel ADA further. Furthermore, the Parabolic Stop and Reverse (SAR) technical indicator bolsters this Cardano price prediction, with the SAR dot pointing below the current price, indicating growing bullish momentum.
Traders may interpret the Parabolic SAR dot as a buying opportunity or a signal to go long in the derivatives markets, expecting further appreciation in Cardano’s price. If this scenario materializes, initial resistance could be encountered at the $0.55 milestone price. However, if a decisive breakout occurs, it could trigger margin calls and short squeezes, potentially pushing ADA prices above $0.65 for the first time since 2024. Conversely, the bears could invalidate this optimistic forecast if a downswing below $0.40 is forced. Nevertheless, the support at $0.45, as indicated by the SAR chart, may pose a formidable obstacle.
Cardano’s recent price recovery has sparked optimism among speculative traders who are placing significant bullish bets on an imminent ADA breakout. The surge in Cardano’s funding rates and its historical data trends support this optimistic sentiment. Allied with the bullish headwinds surrounding altcoin markets and the Parabolic SAR indicator, the expectation of further price appreciation for Cardano is strong. Traders should keep a watchful eye on key resistance levels and the $0.45 support as they navigate the Cardano market in anticipation of a potential major breakout.
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