- Cardano (ADA) shows potential for a breakout as its Total Value Locked (TVL) significantly increases, indicating rising adoption of decentralized applications.
- Key resistance and support levels will determine if ADA can rally or face further consolidation.
The cryptocurrency market has seen a wave of recovery recently, with many altcoins bouncing back from their June lows. However, Cardano (ADA), the native cryptocurrency of the Cardano ecosystem, has been struggling to keep pace. Despite this, there are signs that ADA might be gearing up for a significant breakout.
Sideways Struggle with a Glimmer of Hope
Currently, Cardano is trading at $0.43, maintaining a market cap of $15.4 billion. The price action over the past few weeks has been somewhat lackluster, with ADA moving sideways and facing a stubborn resistance from a downsloping trendline that has defined its price movement for the past three months.
On July 5th, Cardano hit a lower low at $0.316 but managed to rally by 44% to reach a high of $0.457. This bullish move, however, was halted by the aforementioned trendline, preventing a clear breakout. The resistance is part of a channel pattern that has kept ADA in a stable downtrend.
Despite this sideways movement, there are positive indicators on the horizon. The Total Value Locked (TVL) in Cardano has surged by 38%, climbing from $172.78 million to $238.5 million. This increase in TVL reflects a growing adoption of decentralized applications (dApps) on the Cardano network and more capital being committed to these protocols. Such a rise in TVL is often a precursor to price rallies, as it indicates increased user confidence and activity.
Key Levels to Watch: Support and Resistance
The immediate support level for ADA stands at $0.42. This level is crucial for buyers to defend to prevent any further corrections. On the upside, the key resistance remains the downsloping trendline of the channel pattern. A breakout above this trendline could signal a significant shift in market sentiment.
Intraday trading volume for ADA is robust, with $619.5 million changing hands, marking a 164% gain. This increased trading activity could be a sign of growing investor interest and potential upcoming volatility.
Potential Scenarios for ADA
If ADA can break above the trendline, it could flip this resistance into support and initiate a new rally. The post-breakout targets for Cardano would be $0.52 and $0.56, levels that could be achieved if the bullish momentum persists.
Conversely, if the downsloping trendline continues to act as resistance, ADA might see another reversal within the channel pattern. This would mean continued sideways movement and potential further consolidation before a clear direction is established.
While Cardano’s recent price action has been underwhelming compared to other altcoins, the significant rise in TVL suggests that there is underlying strength in the network’s fundamentals. Traders and investors should keep a close eye on the key resistance and support levels, as a breakout could trigger a new phase of upward momentum for ADA
