Cardano price forms rare pattern pointing to a Santa Claus rally

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As a seasoned analyst with over two decades of market experience under my belt, I have seen more than a few chart patterns come and go. However, the current bullish pennant formation on Cardano (ADA) is one that has caught my attention. The symmetrical triangle, coupled with the golden cross pattern, is a rare combination that often signals a strong breakout.

This month, the price of Cardano has been moving mostly horizontally, yet an unusual chart configuration suggests it may rebound in the upcoming fortnight.

Currently, the widely recognized layer-1 digital currency, Cardano (ADA), is being traded at approximately $1.06. This represents a significant drop of almost 20% compared to its peak value this year.

After experiencing a surge that elevated the coin to a multi-year peak of $1.327 in November during the crypto market’s growth, there was a reversal, similar to what other cryptocurrencies such as Avalanche (AVAX) and Binance Coin (BNB) have experienced. These digital currencies have also pulled back from their highest values recorded this year.

The decrease in the value of Cardano occurred at the same time as a drop in the total amount of assets locked within its DeFi (Decentralized Finance) system, as reported by DeFi Llama. Currently, Cardano protocols have approximately $597 million worth of assets, which is lower than the peak of about $700 million last month. The top protocols in its ecosystem are Liqwid, Minswap, Indigo, and Splash Protocol.

As a crypto enthusiast keeping a close eye on Cardano, I’ve noticed a drop in whale activity, and surprisingly, the number of active addresses over the last 24 hours is now less than 43,000. On the other hand, the open interest in the futures market has persistently been decreasing.

In the near future, there are several factors that could cause the price of Cardano to increase. For example, the growing demand for cryptocurrencies, as shown by Bitcoin‘s recent rise above $106,000, might boost ADA’s value. Furthermore, if a spot ETF listing for ADA becomes available as early as 2025, it could potentially contribute to Cardano’s price increase.

For a straightforward rephrase: Over the short term, there’s a possibility that the coin might get a lift due to the “Santa Claus effect,” which refers to an increase in asset values typically seen during the period leading up to Christmas.

Cardano price has formed a rare chart pattern

The daily graph indicates that the price of ADA experienced a robust recovery in November following Donald Trump’s election victory. Since then, it has been gradually shaping a bullish pennant chart structure, characterized by a long upward-sloping line and an equilateral triangle. This pattern is approaching its convergence point, implying that a bullish breakout might soon take place.

In simpler terms, the lines that represent Cardano’s price trend over shorter (50 days) and longer periods (200 days) have crossed each other in an upward direction, which is often seen as a positive sign for potential price increase. This pattern is known as a “golden cross.

As a researcher, I’m confidently predicting that I might witness a robust bullish surge for Cardano in the upcoming days. Should this occur, the coin could potentially reach a peak of $1.325 this year, marking a significant 23% growth from its current value. However, if it dips below the crucial support level at $1.00, such an uptrend might be called into question.

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2024-12-16 19:18