• Cardano price is bound for high volatility following a long consolidation period.
  • The bulls seem to be targeting $0.45 while the bears aim for $0.20.
  • On-chain metrics hint at a stiff supply barrier at $0.35, which seems to favor the bearish outlook.

Cardano price saw a meteoric surge of 200% from late-December 2020 to mid-January 2021. However, the smart contracts token has been stagnant over the past two weeks showing an ambiguous outlook. A potential breakout could see ADA move by roughly 30% in either direction, but on-chain indicators skew with the bears.

Cardano price sits at a make-or-break point

ADA’s consolidation phase is nearing completion as its price trades around the $0.35 level. But, a symmetrical triangle formation indicates that the breakout could happen in either direction. 

Since Cardano has not experienced a significant retracement after it entered a 300% bull rally in the last two months, it is reasonable to assume that it sits in overbought territory. 

ADA/USD 12-hour chart

ADA/USD 12-hour chart

The bearish thesis holds when looking at IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model. This on-chain metric shows a massive concentration of underwater investors at $0.354 who are more than likely to sell their holdings to break-even.

Cardano IOMAP chart

Cardano IOMAP

A spike in sell orders that pushes Cardano price below the 50 twelve-hour EMA will likely validate the bearish outlook. The downswing could be followed by further downward pressure sending ADA towards the $0.27 level where the SuperTrend indicator and the 100 twelve-hour EMA converge.

It would be extremely bearish for ADA price to breach this confluence, as it would cause it to drop towards the 200 twelve-hour EMA around the $0.20 level.

Nonetheless, Cardano could avoid further losses if its price heads higher and breaches the critical supply barrier at $0.354, and closes above $0.38. If this were to happen, ADA price will rise by 30% and target $0.47.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

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