Like many other Layer 1 tokens, the price of Cardano (ADA) also saw significant gains on Monday as bullish sentiment returned to crypto markets. On-chain data analysis examines whether ADA bulls have enough in the tank to pull ADA out of its month-long consolidation phase below the $0.30 area.
Cardano (ADA) set its price at $0.26 on Tuesday, bringing its weekly gain to 12%. Data on on-chain and derivatives markets provide key insights into whether the ongoing crypto rally can break ADA out of its current consolidation phase.
Despite the 12% price increase, speculative Cardano traders remain unconvinced
Over the past week, the price of Cardano has increased by 12%, from $0.24 on September 12th to $0.26 on September 19th. But during this time, speculative traders have withdrawn their capital from the ADA futures markets.
According to crypto derivatives market data platform Coinglass, ADA open interest has declined by $5.6 million since the price rally began on September 12.
Will Cardano (ADA) Price Breakout Amid Crypto Rally? | Open Interest, September 2023 | Source: Coinglass
Open interest represents the total value of outstanding derivatives contracts for a given asset at a given point in time. It provides insights into the market participation of the underlying asset and investor interest.
Typically, a drop in open interest during a price rally indicates that holders of existing long positions are taking profits and closing their positions.
Additionally, the lack of fresh capital inflows may mean that investors do not expect that the ongoing price fluctuations will be large enough to generate significant profits.
Therefore, this divergence between Cardano price and open interest suggests that speculative traders expect the consolidation phase to continue.
Spot traders want to buy, but sellers are waiting for higher prices
Cardano has attracted significant demand as bullish winds swept across crypto markets this week. However, dealers seem to be waiting to sell until prices rise significantly.
According to aggregated data from the order books of crypto exchanges including Binance, Kucoin and Coinbase, ADA buy orders now exceed sell orders.
As shown below, bulls have placed orders to purchase 320.12 million ADA coins, which is significantly more than the 280.3 million ADA coins currently for sale.
While bulls have a firm grip on the market, sellers appear to be waiting for higher prices. The chart below shows that 185 million ADA, or 67% of existing sell orders, are placed at prices of $0.29 and above.
Will Cardano (ADA) Price Breakout Amid Crypto Rally? | Agg Exchange Order Books, September 2023 | Source: IntoTheBlock
The Exchange Order Books chart shows the total volume of active buy/sell orders placed by Cardano holders on recognized crypto exchanges. With excess market demand of almost 40 million ADA, Cardano bulls currently have the upper hand. However, it remains to be seen whether they would be willing to increase their offers in the coming days to meet sellers’ asking prices.
If this does not happen, ADA price is likely to continue its consolidation phase in the coming weeks and not break out of the $0.30 area.
ADA price prediction: Consolidation around $0.25 before breakout
From the key indicators analyzed above, Cardano’s price is likely to remain above the $0.25 area in the coming days based on the current level of demand in the spot market. However, the bulls will have significant difficulty reclaiming the $0.30 area.
The In/Out of Money Around Price data, which outlines the purchase price distribution of current Cardano holders, clearly confirms this prediction.
It highlights that 40.92 million addresses purchased 1.9 billion ADA coins at an average price of $0.28. This resistance level could prove discouraging unless buyers increase their bets significantly.
But if bulls can break this sell wall, ADA price could make another attempt to reclaim $0.30 for the first time since August 1st.
Cardano (ADA) price prediction | IOMAP data, August 2023 | Source: IntoTheBlock
But in the unlikely event that market FUD strengthens, Cardano bears could potentially force a sharp downturn towards $0.20
Although 27,030 addresses had purchased 198.6 million ADA at the floor price of $0.24. And if they decided to HODL, Cardano’s price could consolidate above this area as predicted.
But if this support level allows, ADA price could start moving towards the $0.20 level.
In accordance with Trust Project policies, this pricing analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions.