Cardano (ADA) has had a significant increase in value this week, surging by over 8.5% and reaching $0.535 as of February 8th. The majority of this rise, approximately 6.5%, occurred in the past 24 hours, driven by a combination of technical indicators, on-chain data, and foundational developments.
The rise of Cardano aligns with the positive sentiment in the overall cryptocurrency market. Bitcoin (BTC) and Ether (ETH), the leading cryptocurrencies by market cap, have seen increases of over 4% and 5.25% respectively this week.
Historically, Cardano has shown a mostly positive correlation with Bitcoin, with a correlation coefficient above 0.75 as of this week. This suggests that there is a heightened interest in crypto assets as a whole. This interest is fueled by the recent approval of Bitcoin-based spot exchange-traded funds (ETFs) in the U.S. and the anticipation surrounding Bitcoin’s next halving event in April.
Travis Kling, the chief investment officer at Ikigai, has identified the Federal Reserve’s rate cut policy as one of the major catalysts behind the rally in the crypto market. This, in turn, is boosting the price of ADA.
In addition to broader market trends, Cardano’s price rally can also be attributed to recent improvements in its network activity. The total-value-locked (TVL) across the Cardano ecosystem has increased from 660.30 million ADA to 720.91 million ADA in the past 24 hours. This suggests that more assets are being locked in Cardano smart contracts, indicating growing adoption.
Furthermore, the recent surge in Cardano’s price coincides with a modest rebound in its daily active addresses and daily transactions count.
The price rally of Cardano this week came after the news of Solana’s network outage on February 6th. Cardano and Solana (SOL) are competitors in the layer-one blockchain space. Since the outage, ADA’s value has increased by 6.7% compared to SOL, indicating a possible shift in investor strategy. Traders seem to be reallocating funds from the Solana ecosystem to Cardano, seeking safety amid the volatility.
From a technical standpoint, Cardano’s recent upward movement started at a critical support level, marked by a horizontal trendline at $0.494 and the lower trendline of ADA’s existing bear flag formation. As of February 8th, ADA’s price is aiming for an upward continuation towards the upper trendline of the bear flag, around $0.55. However, bear flags are typically bearish continuation patterns, suggesting a high likelihood of a breakdown. In this case, the price target for ADA would be around $0.421.
If such a breakdown occurs, ADA’s targeted price level by the end of February could potentially adjust to around $0.421, which is approximately 20% lower than the current price levels.
On the other hand, there is also a bull flag setup in ADA’s broader descending channel pattern. This suggests the potential for ADA’s price to rise towards $0.72 by March or April.
It is important to note that this article does not provide investment advice or recommendations. Investing and trading in cryptocurrencies involve risks, and readers should conduct their own research before making any decisions.