Cardano Trading Volume Plunges 94%, Analyst Says 35% Rally Is Only a Matter of Time

▲ Cardano (ADA) / ChatGPT-generated image

Cardano (ADA) has suffered a severe downturn over the past six months, with trading volume plunging 94%. However, the formation of a strong reversal signal—an inverse head-and-shoulders pattern—on the chart suggests preparations for a major rally of more than 35%.

On February 19 (local time), cryptocurrency-focused media outlet BeInCrypto reported that despite Cardano’s on-chain transaction activity falling to its lowest level in six months, its price structure indicates a rebound at the tail end of a downtrend.

According to data from BeInCrypto’s Dune dashboard, weekly decentralized exchange trading volume on the Cardano network peaked at 19,103,979 ADA last August but shrank to just 1,176,723 ADA by February 16 this year. While the outlet noted this signals a sharp decline in network participation, technical analysts interpret the slump as a potential bottoming process.

Cardano is currently completing a classic bullish reversal pattern—an inverse head and shoulders—on the daily chart. The left shoulder formed in January, the head in early February, and the right shoulder has now been validated with support at a similar level. Notably, while the price made lower lows, the Relative Strength Index (RSI) formed higher lows, creating a bullish divergence that indicates quiet accumulation by buyers. For the bullish pattern to be confirmed, a daily candle must close above the neckline at $0.30.

However, on-chain profitability metrics suggest potential selling pressure, calling for caution. The proportion of Cardano supply in profit fell sharply from 27% in late January to 6% in mid-February but has recently rebounded to around 10%. As investors re-enter break-even or profitable territory, they are more likely to take profits. In fact, on February 15, when the share of supply in profit approached 11%, the price plunged 7% in a single day to $0.27.

From a price perspective, Cardano now faces a decisive crossroads at the $0.30 resistance level. If it successfully establishes support above $0.30, technical targets point to an explosive rally of approximately 35% to 38%, reaching between $0.40 and $0.41. BeInCrypto projected that if this upward momentum takes hold, Cardano could lead a broader altcoin market rebound.

Conversely, if Cardano fails to break above $0.30 and falls below $0.27 under profit-taking pressure, the bullish scenario would lose momentum. A breakdown below the $0.22 support level would invalidate the current inverse head-and-shoulders pattern and make further downside inevitable. At present, Cardano stands at a pivotal juncture, with the negative factor of declining trading volume competing against technical rebound signals as the market searches for its next major move.

Cardano faces the challenge of overcoming fundamental limitations caused by shrinking network activity through upward technical momentum. Whether it can break through the critical $0.30 barrier and usher in a return to the $0.40 range, or remain constrained by weak participation and continue its decline, has captured the attention of investors worldwide. Market participants cite recovery in trading volume and a breakout above the $0.30 neckline as the most important indicators to watch.

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