Cardano (ADA) Breakout Signals: Brace for 32% Rally Ahead

• Cardano’s price could surge soon due to whale accumulation, but it’s also at risk of a decline if profit-taking intensifies.

• Recent data shows bullish signals despite Cardano’s recent downturn, with whales accumulating ADA and a potential short-term price rise expected.

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Cardano (ADA) investors are eyeing a potential breakout as the cryptocurrency inches towards new year-to-date highs. However, amidst this optimism, the market remains vulnerable to downturns, particularly if profit-taking sentiment intensifies.

Whale Activity Signals Bullish Momentum

Recent whale activity in the Cardano market suggests a potential bullish comeback. Address holders with significant ADA holdings, ranging between 1 million and 10 million ADA, have accumulated nearly 50 million ADA worth $30.3 million over the past ten days. This accumulation, totaling 5.79 billion ADA, indicates a positive sentiment among large holders, translating to upward pressure on Cardano’s price.

Despite a recent downturn in Cardano’s price, the price-DAA divergence is flashing a sell signal. This divergence compares the asset’s price movement with the number of active addresses daily. While a dropping DAA typically signals bearish sentiment, in Cardano’s case, it suggests a short-term price rise is likely. This dynamic underscores the complex interplay between price momentum, investor sentiment, and network adoption.

ADA DAA divergence: Santiment

Market Challenges and Bearish Outlook

Cardano has faced notable challenges in recent weeks, with a double-digit price decrease over the past week and month. Notably, whale transaction data indicates reduced interest from large holders, potentially signaling a sell-off. Analysts like Ali Martinez view these trends as bearish, warning of potential price stagnation or further declines. This sentiment is echoed in ADA’s derivatives market, where whales have decreased long positions, contrasting with higher long exposure among retail investors.

#Cardano is experiencing a lull in whale activity, signaling potential for further $ADA price consolidation or an impending drop. pic.twitter.com/EXPafRamLB

— Ali (@ali_charts) April 5, 2024

Adding to Cardano’s challenges, Grayscale, the world’s largest digital asset manager, has removed ADA from its flagship Grayscale Digital Large Cap Fund (GDLC) as reported by Crypto News Flash. This move may indicate a decline in the coin’s market prominence, potentially impacting investor sentiment.

Despite recent bearish trends, Cardano maintains a strong market cap of over $21 billion. In the past 24 hours, the trading volume for ADA is $254 million, with a circulating supply representing over 79% of the total supply. The current trading price of Cardano is $0.5906, reflecting a slight increase over the past 24 hours. However, the broader trend shows declines of over 20% in the past month and 9.29% over the past week.

A bullish wedge pattern signals potential upside

Cardano (ADA) currently exhibits a candlestick pattern known as a falling wedge, typically interpreted as a bullish reversal signal in technical analysis. This pattern suggests a breakout could be imminent, potentially leading to a significant rise in ADA’s price. If Cardano breaks out of this pattern, analysts anticipate a substantial increase of approximately 32.91%, with ADA reaching a price of $0.813.

However, amidst this bullish outlook, concerns arise from the divergence between Cardano’s price and daily average addresses (DAA). This divergence indicates a sell signal, suggesting a potential shift in market sentiment towards selling pressure. If this sentiment intensifies, it could lead to a drawdown in Cardano’s price, invalidating the falling wedge pattern and sending ADA to $0.500.The conflicting signals in Cardano’s market dynamics present a challenging landscape for traders and investors. 

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