Cardano (ADA) recently experienced a significant market correction, erasing all its substantial gains from the 2024 U.S. election rally and returning to a critical support zone between $0.32 and $0.36. This retracement has sparked intense speculation about whether the cryptocurrency can stage another impressive comeback from this historically pivotal price level, as technical indicators and market dynamics begin to suggest a potential turning point.
Emerging Technical Signals for a Reversal
Despite its recent slump, ADA has begun flashing several bullish technical signals that hint at a potential recovery. The daily Relative Strength Index (RSI) formed higher lows in November and December while the price printed new lows, indicating a strong bullish divergence. This was further reinforced by a MACD golden cross, coinciding with a 10% post-Christmas rally that saw ADA climb from $0.34 to $0.37. For this uptrend momentum to extend, bulls must successfully reclaim the 50-day Moving Average (MA) at $0.42, which serves as the immediate near-term test. Should this resistance be overcome, the next significant target lies at $0.50. Liquidation heatmaps also support these levels, showing upside liquidity pools aligning with the $0.39 and $0.42 marks, while leveraged longs are concentrated around $0.34.
Holder Sentiment and Market Opportunity
Adding to the potential bullish case, an analysis of holder sentiment via the MVRV ratio reveals that a significant portion of 3-month and annual holders are currently "underwater," meaning they are holding ADA at an unrealized loss. With 3-month holders down 25% and annual holders facing 38% unrealized losses, there is a diminished incentive for immediate selling pressure at current prices. This scenario suggests that many holders might opt to retain their tokens until they can break even or secure a modest profit, thereby reducing supply in the market and potentially creating a buying opportunity. However, it's crucial to note that a definitive break below the $0.32-$0.36 support range would invalidate this recovery thesis, potentially pushing ADA further down towards its 2023 low of $0.24.
