Is Cardano (ADA) Ready for a 100% Rally? Watch for This Critical Breakout

• Cardano (ADA) is showing bullish momentum, with a price increase of over 4% in the past 24 hours. 
• The In/Out of Money Around Price model shows ADA’s current price faces significant resistance.

Cardano (ADA) investors are optimistic as the token gains bullish momentum. Recent analysis has highlighted a bullish pattern on ADA’s daily chart, potentially setting the stage for a significant price rally. Currently trading at $0.3706 with a market capitalization exceeding $13.3 billion, ADA remains the 11th largest cryptocurrency by market cap.

Cardano Strives to Reclaim Top 10 Cryptocurrency Position

Within the past 24 hours, ADA has recorded a price rise of more than 5%, even as other cryptocurrencies struggled with price declines. This is in harmony with the bullish falling wedge pattern on ADA’s chart from February this year. This pattern suggests that ADA is on the verge of breaking through a major resistance level, and if it does, the price will rise massively. 

Cardano’s drop from the top 10 cryptocurrencies was attributed to Tron’s price surge and heightened demand for its token. To re-enter the top 10, Cardano must surpass Tron, which currently holds a market cap of $13.84 billion compared to ADA’s $12.90 billion.

Market capitalization depends on the price and the number of coins in circulation. The In/Out of Money Around Price (IOMAP) model shows that Cardano is in a very delicate situation. The IOMAP shows that the addresses that bought ADA at prices between $0. 33 and $0. 35 are less than the 155,800 addresses that bought 2. 24 billion tokens at $0. 38. These tokens, which are currently worthless because they are out of money, are estimated to be worth about $850 million. 

NVT Ratio Suggests Potential Overvaluation of Cardano

However, despite the current price surge, the on-chain data indicates that the ADA token could be overpriced. The NVT ratio measures the relationship between market capitalization and transaction volume, and the current data points to a divergence. A high NVT ratio indicates that the market cap is above the rate of transaction growth, which implies that ADA may be in a bubble. 

The recent increase in the NVT ratio indicates that ADA’s price is overvalued relative to the transaction activity. This high ratio could be a concern for ADA to hit the $0.38 mark in the near future. 

The Chang hard fork, set to enhance decentralization on the Cardano blockchain, is anticipated to drive a rally for ADA, as CNF previously reported. The upgrade is expected to occur before the end of August. Analysts, including DiscoverCrypto, a YouTube channel focused on altcoin analysis, believe that this hard fork could trigger significant price movement for ADA.

According to DiscoverCrypto, the bottom of ADA’s price cycle may be reached, with expectations for a peak rally in 2024 and 2025. If the Chang upgrade delivers on its promises, it could bolster ADA’s price and market position, offering a potential boost to its valuation and market cap.

On-chain data from Santiment reveals a rise in active addresses on the Cardano network since August 18, 2024. The spike in network activity is also supported by IntoTheBlock’s Large Holder Netflow data, indicating that Cardano whales have been expanding their holdings since August 18.