This week’s increase in ADA prices was caused by both Solana’s network outage and broader market up trends.

Cardano ADA $0.532 tickers down have risen noticeably this week, increasing by more than 8.5% to reach $0.535 by February 8. Roughly 6.5% of this weekly gain happened on the last day, fueled by underlying advances, on-chain data, and technical indications.

ADA/USD daily price chart. Source: TradingView

Overall market trend pushes Cardano up

This week’s surge in Cardano reflects positive sentiment in the cryptocurrency industry. For example, this week, the top cryptocurrencies by market capitalization, Bitcoin BTC tickers down $45,928 and Ether ETH tickers down $2,446, have increased by more than 4% and 5.25%, respectively. Over time, there has been a consistent upward trend in the daily correlation coefficient between Cardano and Bitcoin. This week, it was higher than 0.75.

ADA/USD and BTC/USD daily correlation coefficient. Source: TradingView

Due in part to the U.S.’s recent licensing of Bitcoin-based spot exchange-traded funds (ETFs) and the excitement surrounding Bitcoin’s upcoming halving event in April, this upswing suggests a general increase in interest in crypto assets.

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Ikigai’s chief investment officer, Travis Kling, credits the Federal Reserve’s rate-cutting strategy as one of the primary drivers of the recent surge in the cryptocurrency market, which has raised the price of ADA. He mentioned:

“The market was pricing six cuts beginning in March a week ago. [Jerome] Powell instructed you to travel [in] March last week. On 60 Minutes last night, he stated there were three cuts, not six. What outcome? Boost your stocks. Rise of the crypto.”

Increased on-chain activity

Cardano’s price surge has recently followed clues from the recent increases in its network activity in addition to general market movements.

In the past day, the total-value-locked (TVL) in the Cardano ecosystem increased from 660.30 million ADA to 720.91 million ADA. An increasing TVL indicates a greater number of assets locked in Cardano smart contracts, indicating more uptake.

Cardano’s TVL performance chart. Source: Defi Llama

Additionally, the recent surge in Cardano’s price corresponds with a little improvement in daily transactions and active addresses.

Cardano’s daily active addresses and transactions count. Source: Defi Llama

Solana outage benefits rival Cardano ADA

This week’s price surge for Cardano was in response to the news of Solana’s February 6 network breakdown. Cardano and Solana SOL (tickers down $104) are rivals on layer one blockchain.

Since then, the value of ADA has increased by 6.7% relative to SOL, suggesting a potential change in investor strategy. Traders seem to be shifting their money from the Solana ecosystem to Cardano to hedge against the volatility by taking a cautious approach.

ADA/SOL daily price chart. Source: TradingView

Cardano’s price technical setup

Cardano’s recent upward trajectory started at a significant support level, as indicated below by the intersection of the lower trendline of ADA’s current bear flag formation with a horizontal trendline at $0.494.

ADA/USD daily price chart. Source: TradingView

As of February 8, the price of ADA was aiming for a rise that would take it closer to the upper trendline of the flag: $0.55. Bear flags are bearish continuation patterns; thus, there is a strong chance of a breakdown in the cryptocurrency, with a price target of approximately $0.421.

If ADA experiences a breakdown of this kind, its planned price level by the end of February may drop to roughly $0.421, a 20% decrease from the current levels.

ADA’s bull flag setup

The lower trendline of ADA’s larger descending channel pattern (purple), which resembles a bull flag, is also close to the bear flag downward objective, as illustrated below.

The lower trendline of ADA’s larger descending channel pattern (purple), which resembles a bull flag, is also close to the bear flag’s downward objective, as illustrated below.

ADA/USD daily price chart. Source: TradingView

This bull sign indicates that by March or April, the price of ADA could increase towards $0.72.

Conclusion

The price surge in Cardano (ADA) results from a complex interplay of technological breakthroughs, market dynamics, and investor sentiment. As the project continues to mature and assert its presence in cryptocurrency, the potential for further growth and innovation is significant.

For those interested in Cardano, these developments underscore the importance of staying informed and actively engaged with the project. By understanding the factors contributing to ADA’s recent price surge, investors can make more informed decisions about their involvement with the cryptocurrency, whether as short-term traders or long-term holders.

It’s also worth noting that the cryptocurrency market is inherently volatile and subject to change. While the recent upsurge in ADA’s price is a reason for celebration among supporters, it also calls for vigilance and a measured approach to investing. By remaining cautious and observant, Cardano ecosystem participants can confidently navigate the market and adapt to potential shifts in its trajectory.