Earlier this week, the crypto market saw a notable rally, with Cardano (ADA) experiencing a significant increase of 3.70%, reaching $0.476 on May 6th. This surge in ADA’s value coincides with positive developments in the broader crypto market, including: Bitcoin and Ether rose about 2.5% and 2.7%, respectively. The broader uptrend in cryptocurrencies is primarily due to the US Federal Reserve’s less positive monetary policy outlook for 2024, increasing investor interest.
Bullish Catalysts Driving ADA Growth
At the same time, ADA has benefited from several bullish catalysts that further drive growth. Important developments contributing to the rise of ADA include Cardano founder Charles Hoskinson’s recent efforts with Bitcoin Cash. On May 4th, Hoskinson conducted a poll on social media platform X asking for the community’s opinion on the potential integration of Cardano and Bitcoin Cash. More than 14,360 people took part in the poll, with 68.1% expressing support for integration.
Hoskinson introduced the term “partner chain” and suggested that Bitcoin Cash would need bridging or cross-chains to ensure compatibility with Cardano’s proposed upgrades. Despite the enthusiasm, technical agreement and agreement between stakeholders and developers remains a hurdle that needs to be overcome. Further evidence of ADA’s burgeoning position in the crypto market can be seen in its increasing dominance and changing capital flows.
On May 6th, the ADA/BTC pair rose 1.54% to 729 Satoshis, and the Cardano Dominance Index (ADA.D), which measures ADA’s market capitalization relative to the overall crypto market, also rose. This signals a shift of capital from Bitcoin to Cardano, which accounts for over 50% of the market valuation. Additionally, in April net capital flows across crypto funds, Cardano Fund received $1.5 million, while CoinShares reported Bitcoin Fund and Ether Fund recorded losses of $54 million and $123.8 million, respectively. This is in sharp contrast.
Recent growth hints in potential price increases
Cardano is also showing encouraging signs of further recovery against Bitcoin, featuring a widening bullish divergence between the ADA/BTC pair and its daily relative strength index (RSI). This pattern is reminiscent of a similar bullish signal observed in October-November 2023, before ADA’s value increased by 30%.
Regarding ADA’s price trajectory, the current rally is part of a technical rebound from the interim support level near $0.455. This support level coincides with the right shoulder trough in ADA’s common inverse head and shoulders (IH&S) pattern. Such patterns usually resolve with a price spike after breaking out of the neckline resistance, and if the neckline resistance at $0.476 is broken, ADA price could rise to around $0.543 in May. .
However, a pullback from this neckline could trigger a head-and-shoulders setup, and if the pattern marked by ADA downtrend line support completes, the May downside target could be $0.351 .
