Cardano (ADA) Price Analysis: Breakout to $0.70 this Week?

Key Insights:

• Cardano (ADA) price is currently trading at $0.61 at press time on Dec 25, up 63% for the month.
• ADA price consolidated within the $0.65 – $0.60 range over the weekend, cooling the overheated market momentum over the past month. 
• Aggregate Funding Rates for ADA across derivatives trading platforms provide key insights into price action to expect this week. 

Cardano (ADA) opening price for Monday, Dec 25 stood at $0.61, up 63% growth for the month. After fiercely defending the $0.60 support level over the weekend, Funding rate trends reflect that ADA bulls are keeping up hopes of a $0.70 retest. 

Can the Layer-1 mega-cap altcoin trident of Cardano (ADA), Solana (SOL), and Avalanche (AVAX) extend their yearly gains as 2023 draws to a bullish close?

Cardano Derivative Traders Remain Bullish Despite Weekend Consolidation

Cardano (ADA), Solana (SOL) and Avalanche (AVAX) have formed a bullish trident in December 2023, as crypto investors continue to channel billions of dollars worth of fresh capital towards mega Layer-1 altcoins.

Over the weekend, SOL daring break out above the $100 milestone, but, Cardano and Avalanche had a comparatively uninspiring outing. Similar to AVAX’s rejection at the $50 level,  ADA price retraced from the $0.65 range on Friday. 

But rather that throw in the towel, ADA bulls have regrouped to defend the $0.60 support over the last 72 hours. On a more positive note, ADA Funding Rate trends over the weekend suggest that derivatives traders are betting big on an imminent price breakout after the current consolidation phase. 

The Santiment chart below illustrates that, ADA Funding Rates have been on the rise since the price rejected at $0.65 on Friday. In concrete terms it has increased from 0.03% on Dec 22 to 0.04% at press time on Monday Dec 25, despite ADA price declining 6% during that period.

The Funding Rate is a derivatives trading metric that represents the cost associated with holding a perpetual futures contract position. 

To balance prices in the spot and futures markets, the dominant (long or short) to pay the traders on the opposing side.

In simple terms, rising positive values of Funding rate for an asset means that LONG position holders (bulls) are paying more to the bears to keep their contracts open. 

Cardano funding rate increasing amid a price downtrend over the weekend, is an indication that the paying more fees to keep their LONG positions open.

This means that the dominant expectation in the derivatives market that ADA spot price trend will flip bullish in the coming days.

Hence, this spike in ADA funding rate is a strong indication that the bullish traders expect Cardano spot price trend to flip bullish again in the short-term. 

Historical trends in the chart above also affirms this outlook, showing that ADA price has often entered a breakout during periods of unusual spikes in funding rates.

ADA Price Forecast: Possible $0.70 Retest?

Given the precedence set in recent weeks, the consistent increase ADA Funding Rate over the weekend could be a precursor to a price breakout toward $0.70.  

However, the historical buy/sell trends show that the $0.62 area currently poses a significant resistance 

The In/Out of the Money Around Price (IOMAP) data, which groups the current Cardano holders according to their entry prices. 

It shows that 62,360 current holders will break-even between $0.60 to $0.63. If those holders look to take some profits, Cardano price could struggle in the short-term..  

But if the derivative traders back up their bullish positions with some spot purchases, ADA will likely garner enough momentum smash that resistance and edge toward $0.70 as predicted.

On the downside, the bulls can rely on the $0.58 area for major support. 63,370 holders that bought 946,720 ADA at the minimum price of $0.59 could offer significant support and prevent major downswing in the short-term.