Cardano (ADA) has just recorded an impressive recovery, breaking through the important resistance level of $0.8838 for the first time in months. The price has increased by 17% in just one week, indicating strong buying pressure. However, on-chain indicators suggest that market sentiment is gradually becoming cautious, raising the question of whether this rally can be sustained to reach the target of $1.43.
Money flow reversal – an early profit-taking sign?
An early warning signal comes from the net money flow index on exchanges. After several weeks of continuous ADA outflows from exchanges – usually a positive sign indicating long-term investors are holding – on July 21, approximately $3.35 million in ADA returned to exchanges.
Although the numbers are not large, the return of funds to exchanges after a price increase often implies that selling pressure may be imminent.
The derivatives market is heating up – is there a risk of correction?
Meanwhile, the derivatives market shows signs of overheating. The funding rate – the fee that perpetual contract traders must pay to maintain their positions – surged to 0.024% on July 21, the second-highest level since April.
This reflects extreme bullish sentiment, with most investors betting on an upward trend while using high leverage – a scenario that often leads to short-term corrections.
OBV divergence – is the upward momentum lacking strength?
The OBV (On-Balance Volume) indicator – which tracks buying and selling pressure through trading volume – is also signaling concerns.
Although the price of ADA has surpassed the previous peak of $0.8641 and reached $0.88 on July 21, the current OBV is much lower than in May. This divergence between price and volume suggests that the upward momentum may be weakening.
Target of $1.43 – needs additional momentum from the overall market
On a technical basis, breaking the $0.8838 level opens up opportunities for ADA to approach important psychological levels like $1.00 and $1.0828, before targeting $1.43 based on the Fibonacci expansion level (2.618). However, to achieve a 61% increase from the current level, ADA needs support from a positive trend in the entire cryptocurrency market.
One supportive factor comes from the classification report of Cardano as 'mature' according to Clarity's rating system, placing ADA on par with Bitcoin and Ethereum – a significant advantage in the context of growing ETF expectations. On social media, analyst Dan Gambardello even proposed a hypothetical scenario: if Bitcoin reaches $250,000 and ADA captures 4.5% market share, the price of ADA could reach $12.86.
