Why did Cardano (ADA) price increase this week?
This week, Cardano (ADA) rose more than 8.5% to reach $0.535 on February 8. The bulk of this weekly appreciation is approximately 6.5%, which occurred in the last 24 hours, due to a combination of technical indicators, data on the chain and fundamental developments.
The overall market trend is pushing Cardano higher
Cardano's rise this week reflects a reversed sentiment elsewhere in the crypto market. For example, Bitcoin (BTC) and Ether (ETH), the leading cryptocurrencies by market capitalization, are up more than 4% and up to 5.25% for the week.
The daily correlation between Cardano and Bitcoin has historically been mostly positive. It was over 0.75 this week.
This growth reflects strong interest in crypto assets in general, given the recent US approval of Bitcoin-based exchange-traded funds (ETFs) and speculation surrounding Bitcoin's next April devaluation event.
Ekigai Chief Investment Officer Travis Kling cites the Federal Reserve's devaluation policy as one of the main reasons behind the crypto market's rally, which in turn boosts ADA prices. He noted:
“A week ago, the market was selling six deals since March. Last week, [Jerome] Powell told you to go [in] March. Last night on 60 Minutes, he told you three cuts, not six? Stocks are up. up”
Activity on the chain has increased.
In addition to broader market trends, Cardano's price rally has taken cues from recent improvements in network activity.
Total-Value-Locked (TVL) in the Cardano ecosystem has grown from 660.30 million ADA to 720.91 million ADA in the last 24 hours. An increasing TVL indicates that more assets are locked into Cardano smart contracts, which indicates growing adoption.
Additionally, the increase in Cardano's price over the past 24 hours coincides with a modest reset in the number of daily active addresses and daily transactions.
The interruption of Solana uses the rival Cardano
Cardano's price rally this week came after the news of Solana's network shutdown on February 6th.
Since then, the price of ADA has increased by 6.7% compared to SOL, indicating a possible change in investor strategy. Taking a cautious stance, traders seem to be shifting funds from the Solana ecosystem to Cardano to find safety amid volatility.
Cardano price technical setup
Cardano's recent uptrend has started at a critical support level, which is characterized by the horizontal trend line at $0.494 and the bearish flag formation at ADA meeting the lower trend line as shown below.
In the year As of February 8, ADA price was expected to move up to the flag high trend line near $0.55. However, as bearish flags are the bearer of continuation patterns, the price target is set around $0.421 and there is a high possibility of the cryptocurrency breaking down.
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If such a breakout occurs, by the end of February, ADA's target price level could be adjusted to around $0.421, which would be roughly 20% lower than current price levels.
ADA bull flag configuration
The downside target of the bear flag is near the trendline (purple) of the ADA broad downward channel pattern as shown below.
This bull flag indicates that the ADA price may rise to $0.72 in March or April.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
