Cardano Surges 30% Weekly But Faces Key $1 Liquidity Barrier

Cardano (ADA) recently pushed above $0.90, marking a significant milestone in a five-month trading range. The surge has been accompanied by increased social activity, with Social Volume climbing above 20,000, reflecting heightened trader interest. Despite this progress, ADA remains under a critical liquidity barrier at $1, with historical resistance and supply clusters yet to be tested [1].

The recent price movement appears to be driven in part by leverage and derivatives liquidity, rather than outright spot demand. Open Interest for ADA has surged by more than 25% in the past 24 hours, reaching $1.88 billion. This increase is over five times the growth rate of the next-largest altcoin, suggesting a significant amount of speculative positioning and leverage [1].

On-chain data also highlights whale activity, with transactions of $100,000 or more rising from 86 to over 1,000 within a week. Such a rapid increase indicates strong accumulation and potential short-term liquidity pressure, which may explain ADA’s 30%+ weekly gain [1].

ADA has shown relative strength against Bitcoin and other Layer 1 (L1) competitors. A 15%+ 24-hour surge in price has pushed the ADA/BTC ratio to a five-month high, signaling a shift in market sentiment and a rotation into altcoins [1]. Additionally, Cardano’s 71% quarterly return places it as a strong performer among L1s, trailing Ethereum by just a few percentage points while outperforming Solana by over 50% [1].

However, the path to $1 remains challenging. Two dense liquidity clusters lie beneath the current price, potentially triggering feedback loops that could impede further gains. This structural setup raises questions about whether the recent move represents a breakout or a temporary rally fueled by leverage and short-term positioning [1].

The Grayscale filing for a spot ADA ETF has added a bullish narrative to the mix, aligning with on-chain and sentiment indicators. Analysts suggest that the filing could attract new institutional interest and provide a catalyst for ADA to test the $1 level more seriously [1].

Despite these factors, early signs of profit-taking have already emerged. Whale transaction volumes have cooled to 937, suggesting that some participants are beginning to lock in gains. This behavior could indicate market exhaustion ahead of a potential liquidity crunch, especially if the price fails to clear the next key supply cluster [1].

In summary, Cardano’s move above $0.90 represents a positive technical and sentiment development. However, the path to $1 is complicated by significant liquidity challenges and the risk of short-term volatility. Whether ADA can overcome these hurdles will depend on the strength of on-chain fundamentals and the sustainability of current momentum.

Source: [1] Cardano breaks $0.90 – But ADA faces major $1 liquidity test (https://ambcrypto.com/cardano-breaks-0-90-but-ada-faces-major-1-liquidity-test/)