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Cardano (ADA) price has surged by 15% this week, capitalizing on broader macro bullish cues and hitting a two-month high. ADA is currently trading at $0.40, driven by increased investor optimism.
However, a further rise beyond this level could face significant challenges. Key indicators suggest that two critical factors may hinder Cardano’s upward momentum, preventing it from reaching its next price target.
Cardano Faces Selling
Cardano’s MVRV ratio is flashing warning signs as it currently sits in the danger zone. The 30-day MVRV ratio, which measures profitability for holders, has reached 13%, indicating that many investors are in profit.
Historically, investors tend to secure gains by selling their holdings when the MVRV falls between 10% and 18%. This often leads to selling pressure, causing the price to pull back. Given the MVRV ratio is well within this range, a wave of profit-taking could be imminent, potentially stalling ADA’s rally.
The danger zone for the MVRV ratio has consistently signaled an end to bullish runs as traders seek to lock in their profits. Cardano’s upward momentum could falter if this trend continues, leading to a short-term price correction.
Read more: How To Buy Cardano (ADA) and Everything You Need To Know
Additionally, the Relative Strength Index (RSI) for Cardano is approaching the overbought zone, signaling that the asset may be overextended. Historically, when the RSI inches toward this level, it is followed by a market correction as buying pressure subsides. ADA’s current RSI suggests that the bullish momentum might be reaching its peak, making a pullback more likely.
While the broader market remains optimistic, Cardano’s RSI indicates that the altcoin could be vulnerable to a correction. If ADA follows past patterns, the overbought signal could trigger a cooling-off period.
ADA Price Prediction: No Rise for the Ethereum Killer
Cardano is currently priced at $0.40, marking a 15% gain over the last five days. The bullish trend that started in mid-September suggests a potential rise to $0.46.
However, ADA must first breach the resistance at $0.42 for this to happen. Overcoming this barrier would pave the way for further gains.
That said, the factors mentioned above point to a potential drawdown as market momentum cools. A failure to maintain the current levels could result in a drop to $0.37. If Cardano loses this support, it may fall further to $0.34.
Read more: Cardano (ADA) Price Prediction 2024/2025/2030
On the flip side, if the broader market retains its bullish sentiment, ADA could overpower profit-taking pressures. Breaching $0.42 would invalidate the bearish outlook and potentially send Cardano to $0.46, achieving the anticipated 15% rally.