Cardano's Risk Score Suggests 151% Rally Potential

Cardano (ADA) is showing signs of a potential major rally, according to a custom risk model developed by crypto analysts. The model, which integrates various data points into a single risk score, currently places ADA at 31, a level that closely resembles previous market bottoms before significant rallies. This score is particularly notable when compared to ADA’s historical performance, where the risk rating dipped to around 6-7 during bear markets and was higher during bull markets. The current rating of 31 was also observed during the formation of the right shoulder in late 2023, just before a strong upward move.

Analyst Dan Gambardello explains the significance of this risk score, stating that it is a confluence of multiple data points. He notes that the current setup mirrors the 2023 right shoulder formation before the bull run, suggesting that ADA may be on the verge of a similar upward trend. This analysis is supported by the observation that Cardano’s weekly chart resembles an inverse head and shoulders pattern, a classic technical signal of a market bottom. The current pattern of consolidation has a striking similarity to past bottoming patterns before major bull trends.

Despite facing several market issues, Cardano has proven to be resilient. During the previous cycle, ADA experienced similar challenges, including unclear rules, trade disputes, and market disruptions caused by COVID-19, before it surged. Currently, Cardano is testing an important support level at $0.60, which was once resistance. Technical analysis suggests that if the price breaks above the downtrend line that has restricted price action since the beginning of 2024, it could confirm a bullish continuation pattern. If this pattern is completed, the targets could reach $1.51.

In addition to the technical indicators, the potential launch of Cardano ETFs later this year could provide additional tailwinds for ADA. Following the successful launch of Bitcoin and Ethereum ETFs, market observers anticipate that Cardano could be among the next wave of cryptocurrency ETF approvals. However, short-term volatility remains a concern, with analysts cautioning that there might be continued downside before a major move. According to the analyst, ADA might see a lower low back down to the lower 50s, as it has had the 40s in play.

If the cycle continues to mirror previous patterns, it could mark the beginning of a major move for Cardano. The combination of historical cycle analysis, risk modeling, and technical patterns suggests that ADA may be gradually setting up for a substantial rally in the coming months. This analysis is based on the current risk score, historical performance, and technical indicators, all of which point to a potential bullish trend for Cardano.