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Cardano is following a pattern similar to what it witnessed during the previous market cycle, which preceded a massive price expansion.
The expansion saw Cardano ($ADA) rally a staggering 17,414% between 2020 and 2021, reaching levels it had never seen in its history. While the current market looks bearish, mirroring this move would set the coin up for strong bullish price action.
Key Points
- Analysis spotlighted the close correlation between Cardano’s trend and the manufacturer’s purchase manager’s index (PMI).
- On the monthly chart, both have consolidated for years until the PMI broke out in February, rising to 52.4.
- A PMI expansion has aligned with previous bullish phases for Cardano, with other macro factors like the end of QT also adding flair.
- The monthly stochastic relative strength index (RSI) recently entered the same oversold level that preceded a 17,414% rally in the previous cycle.
Cardano Building Momentum
Notably, $ADA is down 91.6% from its all-time high of $3.10, reflecting the dominant price weakness in the broader crypto market. Currently trading at $0.259, Cardano has also corrected 80.3% from this cycle’s high of $1.32 in December 2024.
Yet for experienced market commentator Dan Gambardello, there is all to be bullish about. In his recent market analysis, he again spotlighted the close correlation between the Cardano’s trend and the manufacturer’s purchase manager’s index (PMI).
The cryptocurrency has moved in close tandem with this indicator, which tracks the health of the manufacturing sector, and he sees this as positive. On the monthly chart, both have consolidated for years until the PMI broke out in February.
The ISM report for February shows a PMI uptick to 52.3, with the current chart showing it has steadied at 52.4. This marked a deviation from earlier trends, sparking optimism that the start of the business cycle would have a similar impact on $ADA as in previous cycles.
Aligning Macro Factors
Gambardello’s chart shows that a PMI expansion has aligned with previous bullish phases for Cardano. A clear example was the 2020/2021 bull cycle, when the coin grew tremendously as the manufacturing indicator strengthened.
Other macro factors also seem to be taking shape. Before the previous cycle’s run, the US Federal Reserve ended quantitative tightening, injecting billions of worth of liquidity into the market. The alignment with the business cycle further boosted capital rotation to the crypto sector, fueling price expansions.
A similar condition is playing out now. The US Fed ended QT in December, with $ADA entering its post-QT correction phase afterwards, as seen in earlier cycles. The analyst believes that when this concludes, the macro shift from liquidity contraction to expansion will fuel the next bull run.
Similar Pattern Led to a 17,414% Cardano Rally
Meanwhile, the analyst also highlighted another striking pattern from the previous cycle that preceded a 17,414% rally from $0.0177 to $3.10. He noted that the monthly stochastic relative strength index (RSI) recently entered the same oversold level that preceded this explosive move.
Notably, each drop to this level has always preceded a rebound, but Gambardello claimed the indicator’s development closely resembled what the market saw in late 2019 and early 2020. With better fundamentals this cycle, he stated that it was not over for Cardano yet amid persisting correction.
Interestingly, if $ADA pulls off a similar 17,414% rally, it will surpass $45 per coin. With this looking ambitious, analysts have highlighted more realistic targets, such as $10. Even so, there is no guarantee of its attainment.
coindesk.com
beincrypto.com
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coinjournal.net