Introduction:
Cardano’s price is experiencing a robust December, with a 75% surge that has propelled ADA to its highest level in 18 months. As altcoins catch up to Bitcoin’s rally, the question arises: What factors fuel the impressive rise in ADA price?
Cardano’s Market Momentum:
On December 9, Cardano witnessed a significant 19% jump, reaching $0.64. While no groundbreaking fundamentals accompanied this surge, it aligns with a broader trend in the cryptocurrency market as it catches up to Bitcoin’s performance this month.
Bitcoin’s market dominance has dipped by 3.5%, prompting traders to explore profit opportunities in altcoins. This shift has notably benefited Cardano, experiencing a remarkable 46% increase in market share since December 6.
Record TVL and ADA Liquidity:
The surge in Cardano’s price coincides with a record high in Total Value Locked (TVL) across its decentralized applications (dapps). On December 9, TVL reached 765.22 million ADA, driven by Lenfi’s 90% surge in ADA reserves, effectively removing tokens from active circulation.
Simultaneously, around $5 million worth of ADA shorts were liquidated on December 9, contributing to a buying spree in the market. However, with Cardano’s weekly Relative Strength Index (RSI) overbought, a potential correction looms on the horizon.
Possible Price Correction:
ADA/USD’s technical analysis reveals the most overbought state since May 2021, with the RSI at 82.75 on December 9. Historically, excessively high RSIs precede price corrections, indicating a potential selloff period. As ADA tests its 0.786 Fib line near $0.648, a decisive breakout could lead to a correction toward multi-month support near $0.243 or propel ADA’s price higher to the 0.618 Fib line near $1.135 by Q1/2024.
As Cardano’s December rally continues, investors should closely monitor these technical signals to navigate potential price movements.
Note: This article is intended for informational purposes only and does not constitute investment advice. Readers should exercise due diligence and consider professional advice before making investment decisions.
