After Bitcoin confidently tested the $27,000 mark and recently crossed the $28,000 mark, numerous altcoins are staging a comeback, recovering from a significant whale sell-off in early October. As the ‘Uptober’ trend is revived, Cardano is showing signs of an upward trajectory, underlined by the formation of a bullish pattern. Furthermore, current on-chain data appears to be tilting in favor of buyers.
Traders gain confidence from ADA’s dip
On-chain metrics show an increase in profit realization among Cardano investors, which was the reason for ADA’s price drop. Data from analytics firm Santiment highlights that AAVE, ADA and CRV are experiencing significantly higher profit-taking among altcoins.
The metric in focus is the “ratio of daily on-chain transaction volume to profit and loss,” which provides insight into how a crypto’s profit-taking volume compares to its loss-making volume. However, the ADA price has put up a strong fight against this benchmark as it now prepares for another surge. As a result, traders are now showing greater interest in activities.
Coinglass data reveals a notable increase in the Open Interest (OI) chart, rising from a low of $100 million to a high of $103.6 million, marking a $3.6 million increase in futures contracts. It is notable that traders are currently taking a bullish position on these contracts.
The long/short ratio has also seen a strong increase and is now leaning towards buyers with a trading ratio of 1.0129 as buyers claim their dominance with 50.3% of positions. Nevertheless, the bears are maintaining a narrow rally, holding off a 49.6% increase in short positions.
Furthermore, whales have not fully exited their positions as recent data on large trades does not offset the substantial $9 billion increase on October 2, indicating that ADA’s price still holds potential for additional upside.
What’s next for the ADA award?
Cardano’s price recently saw a decline from $0.27 due to profit booking; however, the downtrend slowed around the $0.25 dip as buyers emerged with aggressive buying. As a result, ADA price is now validating a ‘cup & handle’ pattern. At the time of writing, ADA price is trading at $0.263, up over 3.2% from yesterday’s price.
If the price confirms the pattern and remains above the 20-day EMA, it would signal a shift in market sentiment from selling during rallies to buying during dips. Consequently, the bulls could try to send the price above $0.28, aiming for an upward trajectory towards $0.3 and then $0.32.
To eliminate the rally, on the other hand, bears would have to pull the price below the 20-day EMA. In this scenario, ADA price could retest the support at $0.25. If this fails, ADA price could head towards the crucial support at $0.23.