Cardanoโs Strong Bullish Signal and Potential Surge
Cardano (ADA) is showing a strong and historical bullish signal in its weekly chart, indicating the possibility of a massive surge for one of the most popular layer-1 blockchains in the cryptocurrency market.
In the week starting on December 4, 2023, Cardano confirmed a breakout of the 50-week exponential moving average (EMA), leading to a price increase from $0.4 to $0.6 per token. This breakout is reminiscent of a similar action that occurred on May 25, 2020.
Prior to this breakout, ADA had also broken through the 50-week EMA, resulting in a price increase from $0.05 to $0.07 within seven days. Following this breakout, the token experienced an uptrend of 5,580% to reach the $3 level by August 2021.
Importance of the 50-week EMA
The 50-week EMA has proven to be a valuable indicator for Cardano, acting both as resistance during bull markets and as support during bear markets. The breakdown of this indicator signaled the beginning of a multi-year bear market that started in late 2021.
Can Cardano Reach $10 in a Bull Market?
Given Cardanoโs previous breakout performance, there is a hypothetical projection suggesting that ADA could surge above $10 in a bull market. However, itโs important to consider that 2024 is not the same as 2020, and there are relevant changes that may hinder such a surge.
Despite these potential obstacles, the current market momentum is strong, which means there is still potential for impressive gains for ADA investors if a bull market ensues.
There are two notable differences to consider when comparing the current situation to 2020. These differences are related to the Relative Strength Index (RSI) and Cardanoโs market capitalization:
- The weekly RSI did not correct as much as it did before, which could weaken the fuel for the next price impulse.
- Cardanoโs supply inflation has artificially increased its market capitalization, which is now over 10 times higher than before.
These factors make ADA a heavier asset to pump compared to the previous period of 2020-2021.
Conclusion: Speculating Cautiously
In summary, technical analysis indicators suggest that Cardano is on the verge of a significant surge in 2024 and 2025. However, itโs important to note that the market and ADA itself have undergone changes in the past four years, with increased competition from other cryptocurrencies. Therefore, it is unlikely that future price action will mirror past performance, and investors should approach speculation cautiously.
Hot Take: Cardanoโs Potential Surge and Investor Caution
Cardano (ADA) has shown a strong bullish signal with its breakout of the 50-week EMA, indicating the potential for a significant surge in its price. However, itโs crucial for investors to exercise caution due to certain factors that may hinder ADAโs performance:
- The weekly RSI has not corrected as much as it did in previous periods, weakening the fuel for future price impulses.
- Cardanoโs market capitalization has been artificially inflated due to supply inflation, making it a heavier asset to pump compared to previous years.
While there is still potential for impressive gains in a bull market, itโs important for investors to recognize that the market and ADA have changed, facing increased competition. Therefore, past performance may not accurately predict future price action, and speculation should be approached with caution.
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