- Cardano price continues its consolidation this week.
- The coin has formed a falling wedge pattern, pointing to a rebound.
- Cardano’s network activity has deteriorated this month.
Cardano price has gone nowhere in the past few months. It has remained inside a narrow channel despite the recent Midnight mainnet launch and other positive ecosystem developments. The ADA token was trading at $0.2500, inside a range it has been in since January 31st.
This article explores why the ADA price may rebound soon despite fading network activity and chain fees.
Cardano Price Prepares a Big Move Ahead
The daily chart shows that the ADA price has moved sideways in the past few months. In this period, it has formed a narrow descending channel, with its two lines about to converge. This channel closely resembles a falling wedge, a common bullish reversal pattern.
Meanwhile, top oscillators have begun to form a bullish divergence pattern. This pattern happens when an oscillator makes a series of higher highs when an asset is falling. In this case, the Relative Strength Index (RSI) has jumped from 24 in February to 45 today.
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Therefore, the token is likely to see a strong bullish breakout, with bulls targeting the next key resistance level at $0.31140. This target price is its highest point on February 25, and is about 27% above the current level.
On the flip side, a drop below the key support level at $0.2290 will invalidate the bullish outlook.
Cardano Network Facing Major Headwinds
The bullish Cardano price forecast is based on its technicals. In contrast, its fundamentals remain substantially weaker than those of other cryptocurrencies.
Data compiled by Dune shows that Cardano has a total value locked of just $135 million, well below that of newer chains like Monad and Plasma.
The dashboard shows that Cardano has a stablecoin supply of just $50 million, with most of them being passive. It had just 2,113 stablecoin transactions on Tuesday. In contrast, top chains like Solana, Ethereum, Polygon, and Tron are handling millions of transactions a day.
Meanwhile, Cardano had only 18,694 transactions on Tuesday, a tiny amount for a crypto project worth over $9 billion. Its active addresses have also plunged in the past few months.
Most notably, Cardano is not generating significant revenue due to weak network activity. It has made just $35k this month, down from last year’s high of nearly $1 million. Its chain fees peaked at $1.7 million in 2021 when it became a top Ethereum alternative.
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