Cardano’s ADA token has recently surged, hitting a one-month peak of nearly $0.40, sparking speculation about an upcoming bull run. With several key metrics showing positive trends, analysts are predicting further rallies. However, a few bearish signs are also lurking, suggesting that caution might be needed. Let’s explore the factors driving ADA’s price action and whether the current rally can sustain momentum.
ADA’s Market Status
Currently ranked as the 11th-largest cryptocurrency, ADA’s market capitalization stands at approximately $13.6 billion. Over the last 24 hours, ADA has shown impressive performance, with its price reaching a high of $0.39. This price resurgence represents a significant recovery from its seven-month low of $0.27 in early August.
Despite the recent rise, 66% of ADA holders are still “underwater” or holding at a loss. However, with 31% now in profit, a growing number of investors are starting to see positive returns.
Three Key Bullish Metrics
Several indicators suggest that ADA may be primed for a continued rally:
- Increase in Large Transactions: One of the most compelling bullish signs is the recent increase in large ADA transactions. On September 25, the total volume of transactions exceeding $100,000 reached $6.6 billion, marking a 12% increase in just 24 hours. Large transactions typically signal heightened interest from institutional investors or high-net-worth individuals, which often precedes further price increases.
- Improvement in the “In the Money” Indicator: According to data from IntoTheBlock, 31% of ADA holders are now in profit, a notable improvement compared to the market crash in August when less than 1% were making gains. This shift indicates growing investor confidence in the token.
- Low NVT Ratio: ADA’s Network Value to Transactions (NVT) ratio currently stands at around 2.7, considered low by industry standards. This suggests that ADA is undervalued relative to its transaction activity, often seen as a precursor to price rallies.
A Word of Caution: Overbought Conditions
While the bullish metrics are promising, ADA’s Relative Strength Index (RSI) has spiked to overbought levels, reaching 81 on September 24. Typically, RSI readings above 70 signal that an asset is overbought and could face an imminent correction. This means that while the rally is encouraging, there may be some short-term downward pressure on ADA’s price.
Cardano’s ADA is showing strong signs of a potential bull run, supported by increased large transactions, improved profitability among investors, and a low NVT ratio. However, its high RSI warns of a potential short-term correction. Whether ADA continues its upward trajectory or retraces slightly, investors should keep a close eye on these key indicators to navigate the volatility ahead.
