Cardano (ADA) has surged 264% over the past month, an astonishing increase. However, the cryptocurrency is encountering resistance at the $1.20 level, indicating that its recent upward momentum may have reached a saturation point.
Despite strong growth for Cardano, overcoming this barrier remains a key challenge for further appreciation. Price movements suggest that Cardano is approaching a critical moment, and maintaining upward momentum may require significant market support.
Cardano is in danger
Cardano's Market Value to Realized Value (MVRV) ratio is currently far above the danger zone, indicating potential risks for investors. The MVRV ratio tracks the profits or losses of ADA holders over the past month.
When the MVRV ratio is above historical standards, it indicates that many investors are holding profitable positions. Therefore, the risk of profit-taking increases, potentially triggering a price correction. Currently, Cardano's MVRV ratio is at historically high levels indicating overvaluation, making ADA susceptible to short-term adjustments.
The danger zone for the MVRV ratio typically lies between 18% and 33%. When the ratio exceeds this threshold, past trends suggest that a correction may occur. With ADA now above these levels, the likelihood of a market downturn increases.
The macro momentum of Cardano is heavily influenced by the broader cryptocurrency market, particularly Bitcoin (BTC). ADA has a strong correlation with Bitcoin, currently at 0.88. This high correlation indicates that Cardano's price movement is largely driven by the direction of the Bitcoin market.
With Bitcoin recently breaking the $100,000 mark, its positive momentum may also bring sustained upward pressure to Cardano. The price trend of ADA may mirror that of Bitcoin, benefiting from the latter's bullish trend.
ADA Price Prediction: Breaking Saturation
Cardano's price is currently facing resistance at $1.20, making it a key level to watch in the coming days. If ADA can break this barrier and establish a support level at $1.20, then this altcoin may further rise to $1.50.
Furthermore, if Cardano continues to maintain a close relationship with Bitcoin, and the broader cryptocurrency market remains bullish, then ADA is very likely to continue rising. A sustained breakthrough of $1.20 could trigger more buying activity, pushing Cardano to new highs and extending its remarkable 264% surge over the past month.
If ADA fails to break through the $1.20 resistance level and experiences a significant decline, it may revert back to the $1.01 support level. Falling below this level would greatly reduce the likelihood of further price increases and could lead to a period of consolidation.