As Cardano (ADA) retests a key multi-year level that previously led to significant price increases, some analysts point to on-chain and derivative signals suggesting a potential price recovery for the altcoin.
Cardano Retests Key Macro SupportOn Tuesday, Cardano dropped 3% to retest a crucial macro support level. The altcoin has been trading between $0.25-$0.30 since the early February market crash, failing to break out of the range’s upper boundary over the past two months.
According to the post, Cardano is retesting the $0.25 area, a major support zone since 2022, in the weekly timeframe. This level marked the bottom of the previous bear market and served as a key area at the start of the latest bull run.
As Martinez noted, the last two times ADA traded around and held this level, back in 2023, it bounced 85% and 200%. The first bounce led to a retest of the $0.46 area, while the second drove the price toward the $0.80 level between October 2023 and March 2024.
ADA Flashes Bottom SignalsDespite the 71% price decline since September, this extremely negative MVRV value generally indicates that ADA is in an “opportunity” or “buy” zone, Santiment affirmed, further explaining that when average returns are significantly negative, it signals an impending turnaround:
On a zero-sum game, when average returns are severely negative, this is an indication of a looming turnaround with coins always averaging 0% on MVRV’s (average trading returns) across any timeframe. So when other traders are in severe pain, key stakeholders and professional traders are intrigued by this due to the lowered risk of buying or adding on to their positions.
“Traders are clearly expecting that the #12 market cap will continue to decline in value,” the firm pointed out, noting that “this historically is another bottom signal, as funding rates are always prone to liquidate and send prices in the direction that traders are expecting the least.”
