The cryptocurrency market has recently shown a clear upward trend, and Cardano's ADA token has followed suit with growth.
Over the past week, ADA's price has increased by 8%, with some analysts suggesting it could see a larger rally.
Key Conditions for a Surge
Analyst Martinez predicts that once ADA breaks through a crucial resistance level, it could potentially climb to $0.338 or even $0.376. As of press time, Cardano's native token ADA was trading around $0.28, nearing this critical price point.
ADA's Relative Strength Index (RSI), Source: Crypto Waves
Looking at the weekly chart, ADA is currently in oversold territory, with its Relative Strength Index (RSI) hovering around 30. Typically, this value is considered a bullish signal, indicating a potential price rebound. Conversely, an RSI above 70 suggests the market is overbought and may signal an upcoming price correction.
'Dead Cat Bounce' Warning?
However, some on-chain indicators suggest ADA might face downward pressure in the short term. Over the past few days, the amount of ADA flowing into exchanges has exceeded the outflow, indicating that some investors are moving tokens from self-custody wallets to centralized trading platforms. This is often seen as a potential precursor to selling.
ADA Exchange Netflow, Source: CoinGlass
When these investors concentrate their ADA selling, it increases the available supply on the market, putting downward pressure on the price. Large investors often act in advance, and their selling behavior could signal expectations of a weaker market. Such activity might trigger panic selling among retail investors.