Cardano (ADA) has seen a significant increase this week, rising by over 8.5% to reach $0.535 by February 8th. The majority of this increase, approximately 6.5%, occurred in the last 24 hours due to a combination of technical indicators, on-chain data, and foundational developments.
The rise in Cardano’s price follows a positive sentiment in the overall cryptocurrency market. Bitcoin (BTC) and Ether (ETH), the leading cryptocurrencies by market cap, have both seen increases of over 4% and 5.25% respectively this week.
The correlation between Cardano and Bitcoin has historically remained positive, and as of this week, it is above 0.75. This indicates a heightened interest in crypto assets overall, driven by the recent approval of Bitcoin-based spot exchange-traded funds (ETFs) in the U.S. and the anticipation of Bitcoin’s upcoming halving event in April.
Travis Kling, the chief investment officer at Ikigai, attributes the crypto market rally to the Federal Reserve’s rate cut policy, which in turn is boosting the price of ADA.
In addition to broader market trends, Cardano’s price rally is also influenced by improvements in its network activity. The total-value-locked (TVL) across the Cardano ecosystem has seen growth, suggesting increased adoption of Cardano’s smart contracts.
Furthermore, the recent increase in Cardano’s price coincides with a rebound in its daily active addresses and daily transactions count.
Cardano’s price rally this week may also be a result of Solana’s network outage on February 6th. Cardano and Solana are competitors in the layer-one blockchain space, and there has been a 6.7% increase in ADA’s value compared to SOL since the outage. This indicates a possible reallocation of funds from the Solana ecosystem to Cardano as traders seek safety amid volatility.
From a technical standpoint, Cardano’s recent upward movement started at a critical support level, and its price is expected to continue upward towards its upper trendline. However, there is a possibility of a breakdown based on the bear flag formation, which could result in a price target of around $0.421.
On the other hand, there is also a bullish setup in the form of a bull flag pattern, which suggests that Cardano’s price could rise to around $0.72 by March or April.
It’s important to note that this article does not provide investment advice, and readers should conduct their own research before making any investment decisions.