Cardano (ADA) has surged nearly 80% in the past week, making it the second-best performer among the top 10 cryptocurrencies.
But after hitting $0.62 on Monday (11), ADA has since retreated to $0.60. For some, this pullback could mark the end of the uptrend. However, the following on-chain analysis suggests otherwise.
Cardano in focus
Cardano’s bullish trend began around November 6, right after all signs pointed to Donald Trump winning the US election. Prior to that, the altcoin’s price was around $0.33, but seven days later, the token rose to $0.62 before falling back to $0.60.
Using data from IntoTheBlock, Average Transaction Size, which offers insight into whale and retail user activity on the blockchain, reveals that the pullback may not last long. When the metric increases, it means that institutional players are engaging in a lot of speculative activity.
On the other hand, a drop in the metric indicates that retail investors are carrying out the majority of transactions. At press time, the Average Transaction Size has increased to $171,588 in seven days, indicating that large investors are playing a crucial role in ADA’s recent rise.
Average Transaction Size on Cardano. Source: IntoTheBlock
Historically, when this happens, Cardano continues its rally, even though it may face brief pullbacks. For example, in March, when the metric jumped like this, the price rose as high as $0.74. So, if this holds, it could now retest $0.62 and possibly move higher.
Another metric that suggests the uptrend is not over is the Average Dollar Age Invested (MDIA). MDIA is the average age of each dollar invested in a cryptocurrency.
An increase in the Average Dollar Age Invested metric indicates that investments are becoming more stagnant, with older coins remaining in the same portfolios. Conversely, a decrease in the MDIA suggests that investments are returning to active circulation, indicating an increase in network activity.
Average Age of Cardano Invested Dollar. Source: Santiment
From a historical perspective, the flow of ADA tokens back into circulation is a bullish sign. Therefore, if MDIA continues to decline, then the altcoin has a good chance of rising beyond its current value.
Read more: How to Buy Cardano (ADA) and Everything You Need to Know
Price prediction
From an on-chain perspective, the In/Out of Money Around Price (IOMAP) shows that ADA is trading at a point where thousands of addresses have accumulated tokens worth $1.24 billion. IOMAP ranks addresses based on their purchase price and shows whether the addresses have unrealized profits or losses.
Furthermore, the metric is crucial for identifying support and resistance. Typically, the higher the volume or cluster, the stronger the support or resistance. As seen below, the altcoin appears to have strong support at $0.59, where 87,950 addresses have purchased around 1.79 billion ADA.
This number is higher than the volume bought between $0.61 and $0.69. Therefore, according to the laws mentioned above, ADA could break above these levels and rise to $0.70 in the near term.
Cardano In/Out of Money Around Price. Fonte: IntoTheBlock
Furthermore, the technical outlook also seems to support this move. On the weekly chart of the ADA/USD pair, the altcoin has broken out of a descending triangle. This is a pattern characterized by a downward sloping upper trendline and a flatter, horizontal lower trendline.
When the price breaks below the lower trendline, a further correction can occur. But in the current case, the price has risen above the sloping upper trendline, suggesting that the altcoin’s value could rise further.
Cardano Weekly Analysis. Source: TradingView
If this is the case, then Cardano’s rally could extend into the next year, with the price possibly rising by almost 127% to $1.34. On the other hand, if selling pressure intensifies before then, this price prediction may not come true. Instead, the cryptocurrency could fall much lower.
Cardano Item (ADA) Falls Again: Can Price Recover? was first seen on BeInCrypto Brasil.
