Cardano (ADA) is showing signs of a potential bullish breakout despite being in a prolonged downtrend. The proof-of-stake cryptocurrency has fallen nearly 50% since its peak in November, but technical indicators suggest a major rally could be on the horizon.
On-Chain Indicators Suggest Bullish Momentum
Recent data from Santiment highlights a rising Mean Dollar Invested Age (MDIA), a metric that tracks the average age of dollars invested in ADA. The 180-day MDIA has surged to 10.68, up from -3.2 in February. Similarly, the 2-year MDIA has increased to 103 from a year-to-date low of 94. Historically, an increasing MDIA is associated with major price rebounds.
A rising MDIA suggests that older wallets are holding onto their tokens rather than selling them. This accumulation phase often precedes a strong price surge.
What’s Driving Cardano’s Recent Decline?
ADA’s recent dip aligns with broader market trends, including profit-taking after its strong Q4 performance. Additionally, concerns surrounding potential economic policies, such as tariffs under a possible Trump administration, have contributed to market uncertainty.
Technical Analysis: Bullish Patterns Forming
The daily chart shows ADA forming a bearish pennant pattern, typically a precursor to a further price drop. However, a broader falling wedge pattern is also emerging. This pattern often signals a strong bullish reversal.
- Bearish Scenario: ADA could drop to the wedge’s lower boundary at $0.555 before reversing.
- Bullish Scenario: A breakout could push prices past the psychological $1 level, with a potential rally toward its December high of $1.32—an increase of 90% from current levels.
What’s Next for Cardano?
If the falling wedge pattern plays out, ADA could experience a significant price recovery in the coming weeks or months. Investors should watch key resistance and support levels, as well as further on-chain data trends, to gauge momentum.
