- Cardano’s trading is currently within a channel of consolidation, which was similar to that which led to 2021’s massive rally.
- The amount of ADA that investors are accumulating is higher than it was in previous periods, and this could affect the expected rally.
Cardano [ADA] has been on a downtrend for the past month, dropping 12.13% — this performance has weighed on the asset.
The downward trend in the market could lead to a rally in 2020. In fact, analysis shows that a movement similar occurred then, which led to ADA’s rally.
Cardano is once again in a pattern of consolidation
ADA’s weekly chart closely resembled the pattern that led up to 2021 rally.
The asset, which had breached the supply zone, marked with the orange rectangle by 2021 returned to the same level. It was then consolidated over a period of weeks before it broke through, reaching $3.10.
In a similar way, current developments closely parallel that of the past as the movement has breached supply zones and now is consolidating inside them.
TradingView
Investors who buy at current prices will gain 457% if this rally continues.
Strong market momentum may extend the rally and push the asset up to $16.
The asset gains a significant advantage from market accumulation
The market’s accumulation of assets has also quietly helped ADA consolidate.
This trend is confirmed by the weekly Coinglass Exchange Netflow Data, which measures asset flows and distributions in order to determine accumulations or disbursements.
Investors bought ADA and stored it in their wallets to hold for a long time.
This group has acquired $379 million worth of ADA—a significant portion of the market—indicating strong interest.
CoinGlass
The ADA that was purchased in this time period is equivalent to 1.7% of the current $22 billion market cap.
It is possible that this group of investors will cause a squeeze in the supply, which would reduce availability and increase demand.
AMBCrypto analysis took it further by comparing the momentum from this accumulation to the one that led to ADA’s 2020–2021 rally.
ADA’s asset value was only $9.57m between the 7th and 16th of Novembre of last year, when it was in a consolidating channel.
The current accumulation rate, then, is 39.6x higher than the last rally cycle. If accumulation increases, ADA’s rally may surpass the previous high of $16.
What’s your market reaction?
Despite a drop in ADA’s value, sentiment on the market remains positive, including in derivatives, where the Open interest weighted funding rate is high.
At the time of press, a reading at 0.0086% indicates more long-term contracts being signed.
CoinGlass
Continual bets made on shorter timeframes can contribute to an asset’s long-term rise if they are sustained.
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Source: ambcrypto.com
