Cardano’s price has remained sideways this month, but a rare chart pattern indicates a potential comeback in the coming weeks.
Cardano (ADA), a popular tier-1 cryptocurrency, is trading at $1.06, down nearly 20% from its highest level this year.
The pullback follows a rally that pushed the coin to a multi-year high of $1,327 in November during the cryptocurrency’s bull run. This decline mirrors the performance of other cryptocurrencies such as Avalanche (AVAX) and Binance Coin (BNB), which have also retreated from their year-to-date highs.
Cardano’s decline coincided with a decline in the total value locked (TVL) in its decentralized financial ecosystem. According to DeFi Llama, total assets of Cardano protocols now stand at over $597 million, up from last month’s high of nearly $700 million. The largest protocols in its ecosystem include Liqwid, Minswap, Indigo and Splash Protocol.
Whale activity on Cardano has also slowed, with the number of active addresses in the last 24 hours below 43,000. Meanwhile, open interest in the futures market continues to decline.
However, several catalysts could cause Cardano’s price to rise in the short term. For example, growing demand for cryptocurrency, as evidenced by Bitcoin rising above $106,000, could support ADA. Additionally, Cardano could benefit from a potential spot listing of the ADA ETF as soon as 2025.
In the short term, the coin could also see gains from a “Santa Claus Rally,” a phenomenon where asset prices tend to rise in the lead-up to Christmas.
Cardano price formed a rare graphical pattern
The daily chart shows that the price of ADA made a sharp comeback in November following Donald Trump’s election victory. Since then, it has slowly formed a bullish pennant pattern consisting of a long vertical line and a symmetrical triangle. This pattern is approaching a confluence point, indicating the possibility of a bullish breakout.
Cardano also formed a golden cross pattern in which the 50-day and 200-day exponential moving averages formed a bullish crossover.
As a result, Cardano is likely to see a strong bullish breakout in the coming days. If this happens, the coin could rise to $1,325, its highest point this year, representing a 23% increase from current levels. However, a fall below the $1.00 support would negate the bullish outlook.
