Cardano dropped to $0.27 on August 5 during a broader market sell-off that led to over $1 billion in liquidations. As the market stabilized, ADA recovered 19%, bringing its price back to $0.37. The token’s current technical setup indicates potential for further gains. Here, we examine notable on-chain data and ADA chart analysis.
What’s Happening with Cardano?
Coinglass data shows Cardano’s futures open interest increased by 21% last week, reaching $191 million. Futures open interest measures the number of outstanding futures contracts, and the increase suggests more investors are entering new positions.
The predominantly positive funding rates for ADA over the past seven days indicate that most investors prefer long positions. Currently, the funding rate stands at 0.0067%, suggesting more investors expect ADA’s price to rise rather than fall. Funding rates are used in perpetual futures contracts to keep contract prices in line with spot prices. Positive funding rates imply higher demand for long positions, indicating a bullish market sentiment.
The increase in ADA demand last week is linked to profitable trading activities. The daily trading volume ratio according to the profit/loss ratio reveals that more ADA transactions are profitable.
Currently at a ratio of 1.11, this means that for every losing trade, 1.11 trades result in profit, strengthening optimism around ADA’s price potential.
ADA Chart Analysis
Cardano’s key momentum indicators on the daily chart highlight increasing buying pressure. The Chaikin Money Flow (CMF) shows a positive value of 0.11, indicating increased liquidity inflow into the ADA market. A CMF above zero usually signifies strong buying pressure and suggests the current rally could be sustained.
Additionally, ADA’s Relative Strength Index (RSI) is currently at 58.24, indicating that buying activity outweighs selling pressure. If this trend continues, ADA could retest its two-month high of $0.40.
