After weeks of extreme volatility and uncertainty, Cardano (ADA) is now at a critical price level. After a series of dramatic price swings — first a 27% surge, then a 20% retracement, then a 10% rally, and now another 7% drop to $0.34 — Cardano finds itself at one of the most critical support levels. Holding this level is crucial for bulls to maintain momentum and avoid further declines.

Market data from Coinglass shows that ADA may be entering a consolidation phase, which usually precedes large price movements. Investors and traders are keeping a close eye on this level as it could determine whether Cardano is ready to break out of a bullish trend or undergo a deeper correction. With the entire cryptocurrency market in a state of anticipation, ADA’s upcoming price action will be key to its next trend. With market sentiment still mixed, this consolidation period could set the tone for the direction of Cardano in the coming weeks.

Cardano on-chain data and other indicators indicate market consolidation

Cardano (ADA) is showing signs of entering a potential consolidation phase, which comes at a critical time as we assess the next move. Recent on-chain data shows a surge in large transactions followed by stabilization, suggesting that the market is cooling down after weeks of volatility. With ADA hovering around key support levels, this stabilization could pave the way for a more balanced price action.

Coinglass data further supports the consolidation narrative. The ADA open interest (OI) weighted funding rate has declined but remains positive. The declining but positive funding rate suggests that demand for ADA is slowing, but not to the point where the market is expecting heavy short selling.

In crypto, when funding rates fall but remain in positive territory, the market consolidates rather than preparing for a sharp drop. This suggests that while ADA’s upward momentum has slowed, there is not yet overwhelming bearish sentiment.

If ADA can sustain above current levels during this consolidation phase, it would indicate a healthy price action. The key will be if the bulls can defend these levels, which could bring about a more sustained rally in the coming weeks. Investors must keep a close eye on these indicators as the market is testing ADA’s resilience.

ADA Testing Key Support Level

Cardano (ADA) is currently trading at $0.34 after failing to reclaim two key levels: the 4-hour 200 moving average (MA) at $0.356 and the 200 exponential moving average (EMA) at $0.359. These indicators are crucial for ADA to resume its bullish momentum, and their rejection suggests that price action could be weak.

Despite this, ADA is still holding above the critical support level of $0.34. If it breaks below this level, the price could face a significant retracement and demand levels could drop to around $0.32 or even to $0.30. This makes the $0.34 support level crucial to maintain the current market sentiment.

Technical indicators also support its rise. The descending triangle pattern that has been weighing on the asset for months has now been broken. He further highlighted several technical indicators that support his optimistic outlook, including the RSI at 45, "perfectly ready for a rebound", a bullish MACD crossover, and confirmation of a triangle breakout.

Conversely, if ADA is able to reclaim the 4-hour 200 MA and 200 EMA and break above $0.36, it could set the stage for a rally to higher resistance levels. The next important supply area to watch would be around $0.41, where further bullish momentum could face its next challenge.

Still, amid these mixed signals, Cardano continues to make progress on its development roadmap. The recent Chang hard fork and Midnight upgrade enhanced the network’s scalability and smart contract capabilities, potentially laying the foundation for increased adoption and utility. However, the impact of these technical improvements on ADA’s price action in the short term remains to be seen.

In simple terms

Current on-chain data for ADA suggests price consolidation, and technical indicators support a long-term bullish outlook. With the Chang hard fork and Midnight upgrade enhancing the network’s scalability and smart contract functionality, it may lay the foundation for increased adoption and utility. Although its impact on ADA’s price trend is weak in the short term, in the long run, technical improvements will improve market indicators and drive its bullish outlook.