Cardano Faces Crucial Test: Resistance at $1.20 Threatens Ongoing Rally

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As a seasoned crypto investor with a decade of market experience under my belt, I must admit that the recent rally of Cardano (ADA) has caught my attention. Having witnessed numerous bull and bear cycles, I can’t help but feel a mix of excitement and caution regarding ADA’s current surge.

Cardano (ADA) has experienced a massive 264% rally over the past month, reaching impressive gains. However, the cryptocurrency faced resistance at the $1.20 level, indicating that it may be reaching the saturation point of its recent rally. 

As an analyst, I’ve observed a robust surge in Cardano’s growth. However, surmounting this current hurdle is pivotal for any potential future price escalation. The price dynamics indicate that we’re approaching a decisive phase where maintaining the upward trend might necessitate substantial market backing.

Cardano Is in Danger

The current MVRV ratio of Cardano, which measures the profitability or loss of ADA holders in the last month, stands significantly higher than safe levels, hinting at potential dangers for investors, suggesting they might want to exercise caution.

When the MVRM (Market Value to Realized Value) ratio surpasses typical thresholds, it indicates that numerous investors are currently holding lucrative investments. Consequently, this heightens the likelihood of profit-taking actions, which might cause a drop in price. At present, Cardano’s MVRM range aligns with past indications of an overpriced market, making ADA susceptible to temporary price adjustments due to short-term corrections.

As an analyst, I’ve noticed that the risky zone for the MVRV (Maker’s Value Realized to Market Value Ratio) usually falls between 18% and 33%. When this ratio surpasses this threshold, historical trends hint at potential corrections. In the current scenario, Cardano (ADA) has moved beyond these levels, suggesting a heightened possibility of a market correction.

The overarching trend of Cardano is significantly affected by the larger cryptocurrency market, specifically Bitcoin (BTC). It’s worth noting that there’s a strong link between Cardano and Bitcoin, currently rated at 0.88. This significant connection indicates that the price fluctuations of Cardano are predominantly influenced by the movement of Bitcoin’s market.

Since Bitcoin has just surpassed the $100,000 threshold, it’s possible that this momentum will continue to push up Cardano too. The fluctuations in the price of ADA are likely to follow Bitcoin’s lead, capitalizing on its ongoing bullish trend.

ADA Price Prediction: Breaking Saturation

At present, the cost of Cardano is encountering resistance near the $1.20 point, making it a crucial area to keep an eye on in the forthcoming days. If ADA successfully surpasses this hurdle and establishes $1.20 as a support level, it may potentially lead to additional growth toward $1.50.

Additionally, if Cardano maintains its close relationship with Bitcoin and the overall crypto market persists in a bullish phase, it’s likely that ADA will carry on its upward trajectory. A persistent break above $1.20 could stimulate increased buying, propelling Cardano towards fresh highs, extending its 264% monthly surge.

If ADA doesn’t manage to surpass the $1.20 barrier and instead undergoes a significant drop, it might revert back to the $1.01 support point. Dropping below this level would substantially decrease the probability of further price increases and could potentially trigger a phase of stabilization.

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2024-12-06 11:04