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2 Key Factors Could Halt Cardano’s 15% Price Rally

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In Brief

  • Cardano surged 15%, hitting $0.40, but MVRV ratio and RSI indicate potential selling pressure and overbought conditions.
  • Profit-taking and RSI nearing overbought levels suggest a correction may follow ADA's recent rally.
  • ADA must breach $0.42 to continue rising; failure could trigger a drop to $0.37 or $0.34.
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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

Cardano MVRV Ratio.
Cardano MVRV Ratio. Source: Santiment

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.

Cardano RSI.
Cardano RSI. Source: TradingView

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

Cardano Price Analysis.
Cardano Price Analysis. Source: TradingView

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.

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Disclaimer

In line with the Trust Project guidelines, this price 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 conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Aaryamann Shrivastava
Aaryamann Shrivastava is a technical and on-chain analyst at BeInCrypto, where he specializes in market reports on cryptocurrencies from diverse sectors, including Telegram Apps, liquid staking, Layer 1s, meme coins, artificial intelligence (AI), metaverse, internet of things (IoT), Ethereum ecosystem, and Bitcoin. Previously, he conducted market analysis and technical assessments of various altcoins at FXStreet and AMBCrypto, covering all aspects of the crypto industry, including...
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