Cardano bulls aim for $1.00 as interest in ADA spikes: Will momentum hold?
- Cardano rebounds, stepping above the 200-day EMA as bulls aim for $1.00.
- Retail interest in ADA surges, underpinned by rising Open Interest and trading volume.
- Cardano's DeFi Total Value Locked sharply rises to $326 million, underscoring steady investor confidence.
Cardano (ADA) rises for the fourth consecutive day, trading at around $0.73 on Friday as bulls tighten their grip on the broader cryptocurrency market. Since ADA reached the cycle bottom of $0.51 on June 22, investors have increased their risk appetite, bolstering the smart contracts token's bullish potential.
A breakout above the critical hurdle at $0.86, which capped price movement in mid-May, could be on the horizon amid a strong derivatives market and a robust Decentralized Finance (DeFi) ecosystem.
Cardano rebound fuelled by strong fundamentals
Retail enthusiasm in Cardano is steady, bolstered by a surge in the futures contracts' Open Interest (OI) and trading activity. CoinGlass data highlights a steady increase in the value of futures and options contracts that have not been settled or closed above the $1 billion mark, reflecting a rising bullish bias in the derivatives market.
The surge in trading volume to $4.34 billion over the past 24 hours aligns with the uptrend in Open Interest, as traders bet more on ADA price soaring higher, especially if bulls maintain control.
Cardano Futures Open Interest | Source: CoinGlass
Investor confidence in ADA extends across the DeFi sector, with the Total Value Locked (TVL), which refers to the value of all coins held in smart contracts of all protocols on the chain, expanding to $326 million.
This 21% increase since June 23 underpins the steady investor confidence in ADA and mirrors recent developments such as the adoption of wrapped Bitcoin (BTC) on the Cardano blockchain.
Cardano DeFi TVL | Source: DefiLlama
Technical outlook: Cardano leans bullish
Cardano price has clawed its way above key moving averages, including the 200-day Exponential Moving Average (EMA), currently at $0.68, the 100-day EMA at $0.66, and the 50-day EMA at $0.63, marking a key technical milestone.
ADA/USDT daily chart
The Money Flow Index (MFI), rising into overbought territory, affirms that the path of least resistance is upward. Additionally, the Relative Strength Index (RSI) at 70 indicates a strong bullish grip likely to keep the price of ADA elevated toward the mid-term $1.02 target, tested as resistance in early March.
Open Interest, funding rate FAQs
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
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