Cardano (ADA) has experienced a remarkable recovery, surging to $0.54 from a 50-day low of $0.43 on January 23. This swift turnaround has ignited excitement among speculative traders, who are now placing big bets on further gains. After enduring a sell-the-news cycle that caused the global crypto market capitalization to shrink by over $270 billion between January 11 and January 23, the recent $180 billion uptick in the market has reignited optimism across the altcoin markets.
As the cryptocurrency market entered recovery mode, prominent Layer-1 coins such as Solana (SOL), Avalanche (AVAX), and Cardano (ADA) emerged as key drivers of the rally. Avalanche and Solana have collectively added a staggering $14.9 billion in market capitalization between January 23 and January 30, enjoying gains of 24.1% and 20.2%, respectively. In comparison, ADA has seen a slightly lower jump of 16%. Despite this, Cardano’s increase to a $2.2 billion market cap over the past week is still noteworthy.
While Cardano’s price surge is impressive, it is the derivative market data trends observed on January 30 that suggest a potential major breakout for ADA. CoinGlass’s funding rates metric, which tracks changes in fees paid by futures contract holders to opposing parties, indicates an unusually large number of bullish bets being placed on Cardano. A significant increase in positive funding rates often occurs when speculative traders swiftly react to a bullish catalyst.
The chart below shows that Cardano’s open-interest weighted funding rate surged by 800% to reach 0.09% on January 30, compared to an average of 0.01% since January 2. This spike in funding rate indicates that bullish traders are willing to pay record fees to keep their LONG ADA positions active. Given the bullish momentum observed in rival layer-1 altcoin markets, it suggests that traders are expecting ADA to catch up with the likes of AVAX and SOL, both of which have delivered impressive performance.
Cardano’s ongoing price uptrend can also be attributed to bullish factors within the altcoin markets. Rising funding rates, coupled with the Parabolic Stop and Reverse (SAR) indicator, further support the prediction of an impending breakout for ADA. The SAR dot currently points to $0.45, indicating growing bullish momentum when compared to the current price of $0.52. Traders may interpret this as a buying opportunity or a signal to go long in the derivatives markets, anticipating further price appreciation.
If the bullish scenario plays out, initial resistance for ADA could be found at the $0.55 milestone price. However, a decisive breakout above this level could trigger margin calls and short squeeze alerts, potentially propelling ADA prices above $0.65 for the first time since 2024. Conversely, the bears could invalidate this optimistic price forecast if ADA experiences a downswing below $0.40. Nonetheless, the support at $0.45, as indicated by the SAR chart, may prove to be formidable.
Cardano’s recent price recovery has ignited optimism in the altcoin markets, particularly among speculators who are placing significant bullish bets on ADA. With the support of on-chain factors and a surge in funding rates, Cardano’s price breakout appears to be imminent. If successful, ADA could experience a significant upward move, challenging key resistance levels and potentially entering uncharted territory.
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