ADA, the ticker for cryptocurrency Cardano, the token that powers the smart-contract-enabled Cardano blockchain, is seeing a modest pull-back on Thursday in the wake of a ferocious two-day rally. Since Monday’s lows under $0.35, Cardano has seen a stunning nearly 18% rally, with ADA/USD last changing hands just above $0.4050. That a little over 3.0% below earlier session highs in the $0.42s, with ADA weighed modestly as short-term bullish speculators take profit.
ADA’s latest run higher, which saw it hit its highest levels since early November, comes in tandem with a face-ripping rally seen across the cryptocurrency space – Bitcoin surged nearly 10% on Wednesday to hit its highest level in months above $24,500, and Ethereum is probing multi-week highs in the $1,700 area once again. Analysts have put the rally down to a squeeze on short positions. That could certainly be a factor lifting Cardano.
According to crypto derivatives website coinglass.com, short-position liquidations spiked to one-month highs in the last few days. The last two days have seen over $3.75 million in short positions forcefully shut by exchanges, the most the 13th of January. The latest move higher marks a meaningful break to the north of Cardano’s 200-Day Moving Average, with ADA now up around 65% on the year.
List of Bullish Tailwinds is Growing
ADA’s rally isn’t just being powered by short squeeze-driven upside and broader crypto market tailwinds. It’s also being driven by a mixture of positive recent headlines/developments relating to the health and growth of the Cardano ecosystem itself.
Most recently, Cardano advocate and founder of Crypto Capital Venture Dan Gambardello opined that he thinks it unlikely that the US Securities and Exchange Commission will deem the cryptocurrency as a security. He gave two reasons for this thesis; 1) Cardano’s ICO took place in Japan and wasn’t available to US investors and 2) that a judge recently ruled that secondary sales of LBRY’s LBC token are not securities, which sets an important precedent for ADA.
Elsewhere, Cardano recently underwent a major upgrade called the “Valentine Upgrade”, while trade value locked (TVL) in smart contracts on the Cardano network continues to rise in the wake of Cardano’s recent launch of the over-collateralized algorithmic stablecoin Djed (DJED), which offers investors new avenues to generate yield within the Cardano Decentralized Finance (DeFi) ecosystem.
Analysis by crypto analytics firm Santiment also suggests that there has been a massive uptick in whale transactions in recent weeks – increased network activity is normally interpreted as a bullish sign for a cryptocurrency.
Price Prediction – 50% Surge Incoming?
Now that Cardano has launched itself back to the north of its 21 and 200DMAs in the $0.38s and back above $0.40, the cryptocurrency is in the midst of pushing through a key long-term resistance area (the $0.39-$0.44 zone). If ADA can muster a meaningful upside break of this zone, particularly the late-October/early November highs in the $0.44s, then the door is open for a swift rally above $0.50 and towards the summer 2022 highs near $0.65.
Some analysts have identified that Cardano has recently formed an inverted head and shoulders pattern, which many interpret as a bullish sign.
