- Cardano had a bullish structure and momentum but weak social sentiment.
- A sweep of the liquidity below $0.5 appeared likely.
Cardano [ADA] saw a bullish market structure flip on the 29th of January. However, the buyers were unable to capitalize on the momentum and flip the $0.52 level to support.
The weighted social sentiment behind the token has also declined over the past ten days.
A Santiment post on Twitter (formerly X) noted that many large-cap altcoins were seeing more bearish sentiment than usual.
? With #crypto market caps ranging and lacking the usual growth traders have been accustomed to since the #bullcycle began in October, there is a notable #bearish sentiment that has taken hold of #crypto discourse this week. #Bitcoin, #Ethereum, #BinanceCoin,
(Cont) ? pic.twitter.com/c3M4bPxlhi
— Santiment (@santimentfeed) February 5, 2024
The post went on to suggest that this was a sign that a bounce in prices was imminent. Does the increased FUD in the crypto market mean we are due a bullish short-term reversal as prices move toward liquidity?
ADA metrics were not encouraging
AMBCrypto analyzed some metrics of Cardano. The Weighted Sentiment’s 7-day simple moving average showed a downtrend over the past two weeks. It has been in negative territory since December.
Source: Santiment
On the other hand, the one-day RSI highlighted a shift in momentum in favor of the buyers. It had rallied past the 50 mark.
This reinforced the idea previously touched upon with ADA’s bullish market structure break.
The MVRV ratio was also negative, showing holders were at a loss and that the token was slightly undervalued.
The active addresses count has trended upward in the past ten days, once again favoring the bulls.
Could the liquidation heatmap shed more light?
Source: Hyblock
The Santiment metrics analyzed above showed conflicting signs. The price action favored the bulls, but the sentiment remained lukewarm.
The liquidation heatmap with a three-month lookback period from Hyblock highlighted two key areas of interest.
The first was the $0.47-$0.481 region, which was estimated to have multiple liquidation levels amounting to $300 million.
Read Cardano’s [ADA] Price Prediction 2023-24
Given its proximity to the price, a drop to sweep this liquidity before a bullish reversal was a possibility.
To the north, the $0.54-$0.56 was also estimated to have a similar amount of liquidation levels. Hence, the trend of Bitcoin [BTC] would also likely influence ADA’s next move.
