Reasons Behind Cardano's (ADA) Price Gain

August 22, 2024 04:13 PM AEST | By Team Kalkine Media

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Cardano's ADA token has demonstrated notable strength, rising by 8% in the last 24 hours to trade around $0.3677 as of August 21. This recent price increase has allowed ADA to recover losses incurred between August 4 and August 5, indicating a potential shift in market sentiment towards the layer-1 blockchain token.

This uptick in ADA’s value follows a significant update from Cardano’s founder, Charles Hoskinson. In a podcast released on August 21, Hoskinson highlighted the upcoming Chang hard fork, scheduled for August 27. He emphasized that the hard fork is a critical milestone in Cardano’s history, introducing new features that combine concepts of liquid democracy and a constitutional republic. These upgrades are expected to empower institutions to make decisions on budgets and roadmaps more effectively.

The Chang hard fork is anticipated to mark the transition to the Voltaire era, completing Cardano's roadmap towards a fully decentralized blockchain ecosystem. Historical data suggests that ADA’s price could see substantial gains ahead of this upgrade. For instance, prior to its last major upgrade in 2021, ADA surged 130%, moving from $1.35 to $3.10 within a month.

In conjunction with the price rise, ADA’s derivatives funding rate has recently turned positive again, moving to 0.0047% as of August 21. This shift indicates growing enthusiasm for long positions. The recent rally has been accompanied by significant short liquidations totaling $701,490, contrasting with $81,450 in long liquidations. Trading volume for ADA has also increased by 51.6% over the past 24 hours, reaching $348 million, with Binance, HTX, and ByBit being the top exchanges in terms of volume.

Technical analysis reveals a bullish divergence between ADA’s price and the relative strength index (RSI) on the daily chart. While ADA’s price recorded lower highs from July 28 to August 20, the RSI showed higher highs, suggesting a strengthening bullish trend. This technical setup, combined with the anticipation of the Chang hard fork, points to a potentially promising outlook for ADA.

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