Is ADA Gearing Up for a Major Rally

Cardano (ADA) may be on the verge of a major comeback, according to emerging data from a custom risk model developed by crypto analysts. The model, which combines multiple data points into a single risk score, currently places ADA at 31, which is strikingly similar to previous market bottoms that preceded substantial rallies.

“Look at in green. We have our custom data. It’s a confluence of a lot of data, but it’s bringing into play a risk score,” explains analyst Dan Gambardello. “Around 31 right now… If you look at this when we bottomed out here back here… we saw ADA right around a risk of like 35 and that was kind of the bottoming out formation of that right shoulder,” Gambardello added.

This score is significant when compared to ADA’s historical performance. In previous bear markets, Cardano’s risk rating dipped very close to 6-7, but was higher during bull markets. . The current rating of 31 was also witnessed during the formation of the right shoulder in late 2023, was formed during late 2023, right before a strong upward move.

While analyzing Cardano’s weekly chart, market observers stated that it resembles an inverse head and shoulders pattern, highlighting the classic technical signal of a market bottom. The present pattern of consolidation has a remarkable similarity to past bottoming patterns before major bull trends.

Related: Analyst Singles Out Cardano for Major Boost Following New US Crypto Law

Despite facing several market issues, Cardano has proved resilient. During the previous cycle, ADA experienced the same issues, especially with unclear rules, trade disputes, and market disruptions caused by COVID-19, even before it surged.

Currently, Cardano is testing an important support level at $0.60, which was once resistance. Technical analysis suggests that if the price breaks above the downtrend line that has restricted price action since the beginning of 2024, it can confirm a bullish continuation pattern. If the pattern is finished, the targets could reach to $1.51.

Cardano Eyes Breakout Amid ETF Hopes

In addition, the potential launch of Cardano ETFs later this year could provide additional tailwinds for ADA. Following the successful launch of Bitcoin and Ethereum ETFs, market observers anticipate that Cardano could be among the next wave of cryptocurrency ETF approvals.

However, short-term volatility remains a concern. “That doesn’t come without short-term continued downside,” cautioned the analyst. “We might go lower. We might see a lower low back down to the lower 50s. We’ve had the 40s in play.”

Related: Cardano Tests $0.63 Support as Downtrend Threatens Further Losses

If the cycle continues to mirror previous patterns, it could mark the beginning of a major move for Cardano. The combination of historical cycle analysis, risk modeling, and technical patterns suggests ADA may be gradually setting up for a substantial rally in the coming months.