Cardano Price Hits Multi-Year Support – Is a Recovery for ADA on the Horizon?

As Cardano (ADA) revisits a significant multi-year support level that previously triggered notable price increases, analysts are noting on-chain and derivative signals that suggest a possible recovery for the altcoin.

Key Takeaways

Current Price Range: Cardano is trading between $0.25 and $0.30, having dropped significantly from its earlier heights.
Historical Significance: The $0.25 support zone has previously marked the bottom of bear markets and led to considerable price increases.
Recent Signals: Indicators suggest a potential price recovery for ADA, with expectations of a possible target between $0.32 and $0.37 by late April.
Market Conditions: High negative returns for average investors indicate a possible turning point, while traders show a heavy inclination towards further price declines.

Cardano

This article explores Cardano's recent price movements as it approaches a critical support level that historically preceded rallies. Analysts have provided insights based on market behavior, indicating potential for a price rebound amidst current trends.

Cardano Retests Key Macro Support

On Tuesday, Cardano experienced a 3% dip as it retested a vital macro support level. Following the market crash in early February, the cryptocurrency has remained within the $0.25-$0.30 range for the past two months, struggling to break the upper limit of this range.

Presently, ADA's price has retraced to the lower part of its one-month accumulation zone, fluctuating between $0.25-$0.27 amid recent market volatility. Market analyst Ali Martinez noted that ADA has been revisiting a crucial multi-year support level during this period.

Martinez pointed out that Cardano is currently testing the $0.25 level, which has been a significant support zone since 2022. This area marked the lowest point during the previous bear market and was a key starting point for the latest bull market.

Cardano
ADA retesting significant multi-year support. Source: Ali Charts on X

Martinez highlighted that the last two instances where ADA traded around this support level in 2023 resulted in rebounds of 85% and 200%. The initial bounce pushed the price towards the $0.46 mark, while the subsequent recovery drove the price up to approximately $0.80 from October 2023 to March 2024.

The analyst also mentioned that ADA recently presented a buy signal, indicating a likely recovery soon. The TD Sequential indicator has displayed a 'black 9' on the weekly chart, which suggests that the recent downtrend may be ending. This pattern typically anticipates one to four weeks of upward movement.

If ADA maintains its current price levels, it could aim for $0.32-$0.37 by late April. Martinez commented, "We’ve endured the six-month downturn; now we’re on the lookout for a potential price recovery."

ADA Indicates Potential Bottom Signals

Adding to the positive outlook, the analytics firm Santiment has highlighted various on-chain and derivative signals that may indicate a forthcoming reversal for Cardano.

According to their analysis, Cardano's average active wallets have reported a 43% negative return on investments over the past year, suggesting a price rebound is more likely than usual. Despite a 71% price drop since September, this significantly negative Market-Value-to-Realized-Value (MVRV) value typically indicates that ADA is in a "buy" zone. Santiment elaborated that when average returns are notably negative, it often precedes a price turnaround.

In a zero-sum game, when average returns are significantly negative, it's often a sign of an upcoming turnaround, as coins typically average around 0% on MVRV across various timeframes. This scenario attracts key stakeholders and professional traders due to the reduced risk associated with buying or adding to their positions.

Additionally, Santiment noted that the funding rate for Cardano on Binance shows the largest imbalance toward short positions since June 2023, hinting that traders are largely expecting further declines.

“Traders clearly anticipate that the #12 market cap asset will continue to decline in value,” the firm noted, adding that “historically, this also serves as an indicator of a potential bottom since funding rates can often lead to liquidations and push prices in the opposite direction than traders expect.”

cardano, ADA, ADAUSDT
ADA’s performance on the one-week chart. Source: ADAUSDT on TradingView