Cardano (ADA) Rallies 13.5% in March, Social Sentiment Hits 4-Month High

Cardano (ADA) has shown a steady 13.5% increase in March, recovering from a 32% dip in February. Despite this recovery, the altcoin remains down 15% for the first quarter of the year. Technical indicators suggest that the recent positive price action may continue.

Over the past 10 days, the price of ADA has been fluctuating between $0.78 and $0.70. However, the social sentiment surrounding Cardano has reached a new year-to-date high, indicating a potential bullish trend. According to an onchain intelligence platform, Cardano's social sentiment has hit its highest positive measurement in four months. This surge in sentiment is likely due to recent comments from the US Securities and Exchange Commission (SEC), which classified Cardano's use case as "smart contracts for government services." This classification has led to an increase in positive comments about ADA, reaching its highest ratio since the first week of November 2024.

A rise in social sentiment often correlates with increased trading activity and higher prices. In the fourth quarter of 2024, a rise in positive social sentiment and active transactions went hand in hand for ADA. However, the current environment is slightly different. Data from Cardanoscan.io shows a significant decrease in the number of active transactions compared to early November 2024. In the fourth quarter, the average transaction count remained above 100,000 for most of November and December, but it has since dropped by roughly 70%, with the number of transactions coming in at 26,437 on March 18.

Despite the weak onchain activity, the strength of Cardano lies in its community. The CEO of 0G Labs highlighted that Cardano and other established tokens have been around for a while, are liquid, and are unlikely to spring any sudden surprises. This stability and community support could contribute to a potential rally for ADA.

Irrespective of the underwhelming onchain data, ADA's price has been responsive to positive news in the past. The altcoin has maintained a position above the 0.50 Fibonacci retracement line, indicating that its high-time frame (HTF) chart remains on a technical uptrend. Cardano has retained support from the ascending trendline while oscillating between its parallel channel. The immediate resistance lies at the upper range of the channel at $0.78, which is supported by the 200-day exponential moving average (200-DEMA). A positive candle close above the 200-DEMA on the daily chart could indicate a bullish shift, potentially triggering a move above $0.78.

The immediate target above $0.78 lies between $0.84 and $0.88, where a daily fair value gap (FVG) is present. A retest of $0.88 marks a 20% return from its current price. However, historically, Cardano has exhibited prolonged sideways movement, which could limit immediate gains. A break above $0.78 would validate further confirmation for a rally, but until then, the altcoin may continue to range between $0.78 and $0.70.