Cardano: The perfect time for a breakout?
Cardano (ADA), the twelfth-largest cryptocurrency by market capitalization, is currently trading around $0.26, recording an increase of over 3.4% in the last 24 hours. Despite this slight rebound, the asset remains heavily battered: it is trading 71% below its local high of $0.90 and more than 91% down from its ATH (All-Time High) of $3.10 reached in September 2021.
However, beneath the surface, selling pressure seems to be running out of steam. Open Interest holds steady at $374 million, while the short-to-long ratio has reached highs not seen since June 2023. This overrepresentation of short positions (bearish) creates fertile ground for a potential short squeeze, a massive liquidation of short sellers capable of violently propelling the price upward.
Cardano (ADA) ready for a rally thanks to an oversold RSI?
Technical analysis reveals a particularly interesting setup for buyers. Cardano’s weekly RSI (Relative Strength Index) recently plunged into oversold territory, a classic indicator of bearish trend exhaustion. Historically, this type of signal often precedes a major bullish correction or a lasting trend reversal.
Furthermore, the 365-day MVRV (Market Value to Realized Value) ratio shows a 43% drop. According to historical data shared by Santiment, a similar fall in the MVRV in December 2023 was followed by a spectacular 58% rally. If history repeats itself, Cardano (ADA) could well surprise investors with an impulsive upward move.
In terms of key levels, major support sits at $0.253. As long as buyers defend this zone, a bounce toward the major POC (Point of Control) at $0.285 remains the primary scenario. Conversely, a break below this support would invalidate this momentum and could trigger a deeper retracement toward $0.244.
ADA’s price remaining below the POC indicates that the trend is still firmly bearish and that buyers need to step in with higher trading volumes to kickstart a sustainable uptrend for ADA.
Can fundamentals reignite the ADA bull run?
Beyond technical analysis, the Cardano network is gearing up for major fundamental developments. The highly anticipated launch of the privacy-focused Midnight mainnet is scheduled for the end of the month. This strategic update aims to strengthen the blockchain’s decentralization and institutional appeal.
In parallel, the pre-release of the Cardano 10.7.0 node paves the way for the van Rossem hard fork. This technical upgrade promises to significantly enhance the network’s cryptographic capabilities and smart contracts. These catalysts could provide the necessary fuel to validate a bullish breakout and attract fresh capital.
Institutional interest is not waning either. Giants like Grayscale, 21Shares, and ETC Group continue to increase their exposure to Cardano (ADA) through multi-asset funds, pending the potential approval of a dedicated ETF by the SEC. This quiet accumulation contrasts sharply with the prevailing pessimism among retail investors.
The convergence of an oversold RSI, a high risk of a short squeeze, and imminent fundamental updates puts Cardano (ADA) at a decisive crossroads. If the bulls manage to break and flip the $0.28 glass ceiling into support, the asset could quickly fill its liquidity gaps and target much more ambitious goals before the end of the year.
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