Cardano is going through a stagnation phase while the rest of the cryptocurrency market aims for higher highs. As investors shift their attention to pumping coins, ADA could be preparing for a breakout.
Consolidating Between Massive Supply Walls
Cardano has been stuck within the 200 and 50-twelve-hour moving averages since Sept. 25. These critical hurdles have limited the price action to a small trading range that is getting narrower over time. ADA’s inability to bust through support and resistance makes this area a logical no-trade zone.
Given Bitcoin’s impressive rally towards $13,000, it is reasonable to assume that a breakout will soon occur. However, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model suggests that moving past the overhead resistance will not be easy.
Based on this on-chain metric, roughly 5,200 addresses had previously purchased 2 billion ADA between $0.11 and $0.113. Such a massive supply barrier may have the ability to keep rising prices at bay. Holders within this price range would likely try to exit their previously underwater positions, pushing prices back down.
Because of the significant resistance ahead, the long-term sentiment around Cardano has been overly pessimistic. Many market participants seem to believe that ADA does not have the buying pressure behind it to break out. They appear to be waiting to catch long positions at lower prices.
ADA’s Sentiment Foreshadows Breakout
Nonetheless, going against the herd has proven to be a profitable strategy, especially in the cryptocurrency market. From a counter sentiment perspective, such a state of disbelief is quite bullish as the odds for a major breakout that catches traders off guard drastically increase.
If Cardano manages to turn the $0.11-$0.113 resistance into support, the IOMAP cohorts show no other barrier ahead that will prevent it from rising towards $0.13.
It is worth mentioning that if the overhead resistance rejects any upward price action, the $0.1 level may act as stiff support. Here, more than 18,000 addresses are holding nearly 2.5 billion ADA, according to IntoTheBlock’s IOMAP.