Cardano (ADA) experienced a sharp drop to $0.27 on August 5 during a market-wide sell-off that led to over $1 billion in liquidations. However, as the market found stability, ADA rebounded by 19%, climbing back to $0.37. This recovery, along with its current technical indicators, suggests that Cardano might be poised for further gains.
Cardano Gains Momentum Amid Market Optimism
In the past week, Cardano’s futures open interest surged by 21%, reaching $191 million, according to data from Coinglass. This increase indicates that more traders are entering new positions, showing growing interest in ADA. The majority of traders are favoring long positions, as reflected in the positive funding rates, which currently stand at 0.0067%. This trend suggests that the market expects ADA’s price to continue rising.
Funding rates play a crucial role in perpetual futures contracts by aligning contract prices with spot prices. Positive rates, like the ones seen for ADA, indicate higher demand for long positions, signaling bullish sentiment.
Additionally, the daily ratio of transaction volume in profit versus loss has been in favor of profitable trades, with a ratio of 1.11. This means that for every losing trade, 1.11 transactions have been profitable, reinforcing the optimism surrounding ADA’s price potential.
ADA Price Prediction: Could $0.40 Be Within Reach?
Cardano’s key momentum indicators on the one-day chart are showing signs of increasing buying pressure. The Chaikin Money Flow (CMF) currently sits at 0.11, indicating a significant inflow of liquidity into the ADA market. A CMF above zero typically signals strong buying activity, suggesting that the current rally could continue.
The Relative Strength Index (RSI) for ADA is also showing strength at 58.24, suggesting that buying pressure is currently outweighing selling activity. If this trend persists, ADA could potentially retest its two-month high of $0.40.
However, it’s important to monitor the market closely. If traders begin to take profits and momentum reverses, ADA could see a 27% drop back to the $0.27 level. This potential downside highlights the need for caution and close observation of market trends and sentiment.
