- Cardano’s price sees a slight rebound on Tuesday after a nearly 7% drop the day before.
- On-chain data suggests a potential recovery as ADA’s funding rate turns positive, marking the highest level of bullish bets in a month.
- A daily candlestick closing below $0.57 would undermine the bullish scenario.
Cardano (ADA) has gained roughly 4%, trading at about $0.70 on Tuesday following a nearly 7% decrease the prior day. On-chain indicators point towards a possible recovery, with ADA’s funding rate becoming positive and bullish bets reaching a monthly peak.
Cardano Price Outlook: ADA Revisits Critical Support Level
Last week, Cardano’s price dropped by 36.36%, continuing its decline with another nearly 7% drop on Monday. At the moment, on Tuesday, it is showing a slight recovery after testing its significant support level at $0.64.
The $0.64 mark aligns closely with various levels that define it as a crucial reversal zone:
- The previously breached descending trendline.
- The 61.8% Fibonacci retracement level situated at $0.67.
- The bullish order block area spanning from $0.64 to $0.57, where prior buy orders were placed by market participants, including institutional traders.
If this support level holds firm, ADA could potentially continue its recovery to revisit the next resistance point at $0.98.
However, the Relative Strength Index (RSI) currently sits at 44, below the neutral 50 level, suggesting ongoing bearish momentum. The RSI must exceed the neutral threshold of 50 to maintain bullish momentum. This potential shift could aid in a recovery rally.
ADA/USDT daily chart
On-chain Metrics Indicate a Potential Recovery for Cardano
On-chain metrics suggest further recuperation. Current data shows ADA’s long-to-short ratio standing at 1.06, the highest in over a month. This figure, above one, reflects bullish sentiment in the market, indicating an increased number of traders anticipating a price rise.
ADA long-to-short ratio chart.
According to OI-Weighted Funding Rate data, there are fewer traders betting on a further price decline than those expecting an increase. This index is calculated based on the yields of futures contracts, weighted by their Open Interest (OI). Typically, a positive rate (longs pay shorts) indicates bullish sentiment, whereas negative values (shorts pay longs) denote bearishness.
For ADA, this measure shows 0.0007%, indicating a positive rate and that longs are compensating shorts—a scenario that often signifies bullish market sentiment, hinting at a possible price recovery for Cardano.
Cardano OI-Weighted Funding Rate chart.
Despite the supportive indicators from both on-chain data and technical analysis, a daily candlestick close below $0.57 would contradict the bullish outlook. Such a movement could lead to a price drop and a retest of the next support level at $0.50.