Cardano (ADA) has recently shown significant bullish momentum, prompting traders to closely monitor its price action. After a sharp recovery from the $0.66 zone, ADA is testing the upper resistance of a descending parallel channel around the $0.708 level. This recovery has fueled a sense of optimism across the market, with both retail and institutional traders turning increasingly bullish. As a result, ADA’s price could be on the verge of a breakout, especially if it manages to clear the nearby resistance.

Sentiment within the market has flipped decisively bullish, with retail traders showing increased optimism and “smart money” sentiment also turning positive. This optimistic shift is further evidenced by Cardano’s climb to the upper boundary of the descending channel, which, if breached, could signal a continuation of the upward trend. At the time of writing, Cardano is trading at $0.7226, having posted a daily gain of 6.22%.

The bullish outlook for Cardano has also been supported by the dynamics of short liquidations. According to CoinGlass data, over $880K worth of short positions were liquidated across major exchanges in the past 24 hours, compared to just $25.53K in long-side liquidations. Binance accounted for a substantial portion of this, with $421K in short squeezes. This liquidation pressure suggests that bearish traders are being forced to close their positions, adding upward momentum to ADA’s price. Furthermore, there are dense liquidation clusters between $0.74 and $0.75, which could act as price magnets if bullish momentum continues.

Despite the recent price jump, on-chain data reveals that large transactions have significantly decreased. Transactions above $1 million have dropped by over 83%, and those above $10 million have plummeted nearly 87%. This decline in whale activity suggests that the recent price movement has been primarily driven by retail investors. However, the potential return of institutional capital could accelerate ADA’s price movement, especially if it breaks through key resistance levels.

Cardano’s Market Value to Realized Value (MVRV) ratio, which tracks the profitability of ADA holders, has surged to +13.34%, indicating that a portion of investors may be sitting on unrealized profits. While the ratio is still below the 25% risk threshold, which typically signals heightened sell pressure, it could be approaching a point where profit-taking becomes a factor. Still, the current MVRV level leaves room for further upside potential, especially if bullish sentiment persists.

Technically, Cardano has reclaimed the 0.618 Fibonacci retracement level at $0.6921, and is now eyeing the 0.786 Fibonacci zone at $0.7186. With the next key resistance levels lying at $0.7523 and $0.8498, ADA could continue its ascent if it maintains momentum above the $0.72 level. The Directional Movement Index (DMI) indicator further supports this bullish thesis, with the +DI line above both the -DI and ADX, suggesting that the trend is strengthening.

The combination of positive sentiment, short squeezes, technical indicators, and increasing on-chain profitability presents a compelling case for continued bullish movement in ADA. However, the absence of whale involvement could introduce some caution, as the current rally has been predominantly driven by retail traders. If Cardano can break above the $0.75 level and trigger further short liquidations, there is a strong likelihood that ADA could push toward $0.80 and possibly beyond in the short term.

In conclusion, Cardano is approaching a critical juncture, with bullish sentiment, technical strength, and short liquidations all aligning to support a potential breakout. If ADA can clear the $0.75 resistance, the path toward $0.80 and beyond becomes increasingly likely, making it a key level to watch in the coming days.