Cardano network activity explodes, suggesting that a breakout is underway
- ADA is fluctuating in a horizontal channel since early October.
- Network activity points out to a possible bullish breakout.
- IOMAP shows price is floating above key support area.
Since the beginning of October, Cardano is fluctuating in a relatively narrow band and is struggling to make a decisive move in either direction. However, on-chain metrics suggest that the so-called "Ethereum killer" could be on the verge of a bullish breakout. As of writing, ADA was down 3.5% on a daily basis at $0.1057.
ADA's consolidation channel remains intact for now
Following the August-October downtrend, Cardano seems to have gone into a consolidation phase between $0.9 and $0.11. The price tested the upper limit of this channel twice in both October and November. After the latest failed attempt, ADA retreated to the mid-point around $0.1 and started to recover its losses.
ADA/USD 4-hour chart
IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model confirms that strong support area is formed around $0.1, where nearly 5.5 billion ADA were bought by 26,610 addresses. Furthermore, the model also validates the $0.11 area, the channel resistance, as a key hurdle. More than 14,000 addresses acquired a total of 3.1 billion at an average price of $0.1095.
ADA IOMAP
Meanwhile, IntoTheBlock’s “Daily Active Addresses” model reveals that more than 7,000 new addresses are joining the network on a daily basis. The steadily-increasing interest in the cryptocurrency in the past week, as reflected by the +9.46% growth in new addresses, signals a bullish breakout is more likely than a bearish one.
ADA Daily Active Addresses
If the price manages to make a decisive move beyond $0.11 and flips it as a support, the next target of $0.14 could be set by using the height of the current trading channel.
ADA has been having a tough time setting its next short-term direction since early October. With the price sitting above a key support level and the network activity showing convincing signs of life, a bullish breakout seems feasible. A daily close below $0.1 could, however, cause buyers to lose interest and drag Cardano back to $0.9 area.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
