Cardano (ADA) is showing strong signs of bullish momentum as both retail and institutional sentiment align. With a critical technical setup and rising network activity, ADA is nearing a key resistance level that could trigger a significant breakout toward the $0.80 zone. Here’s a look at the factors driving the bullish outlook for Cardano.

Sentiment Rising: Retail and Institutional Optimism Align

Cardano is gaining traction in the market, with both retail and institutional sentiment signaling positive momentum. Current sentiment scores show a crowd sentiment of 0.99 and smart money sentiment at 1.05. This alignment between retail optimism and institutional confidence often signals the potential for significant price movement. As ADA approaches resistance near $0.671, this growing market confidence could serve as the catalyst for a rally.

On-Chain Data: Address Activity Surges

Recent on-chain data supports the idea of rising momentum for ADA. In the past week, there has been a notable increase in user activity. New addresses grew by 4.79%, while active addresses surged by 11.99%. Additionally, zero-balance addresses climbed by 12.26%. These metrics suggest that more users are engaging with the network, either reactivating dormant wallets or preparing for potential moves in the market. This growing participation could lay the foundation for a sustained upward trend in ADA’s price.

Liquidity Metrics: A Slight Pullback, but No Major Concern

Despite the rise in network activity, liquidity metrics for Cardano have seen a minor dip. The Total Value Locked (TVL) in Cardano’s DeFi protocols fell to $377.2 million, reflecting a 2.18% decrease in the last 24 hours. Similarly, the stablecoin market cap within the ecosystem dropped by 1.90% over the past week. While these declines indicate some caution among capital allocators, they are relatively shallow and have not historically derailed ADA’s momentum. Therefore, the liquidity environment does not pose a significant threat to the broader bullish narrative.

The Liquidation Zone: A Crucial Area for ADA

Derivatives data reveals a large cluster of short liquidations just above the $0.67 price level. ADA is currently trading at $0.6380, having registered a 1.12% decline at the time of writing. However, this minor pullback brings the price close to the liquidation zone, where a strong push above the $0.671 mark could trigger a wave of short liquidations. Such a scenario could act as a catalyst for a rapid price move higher, making this area a high-stakes zone for traders.

Inverse Head-and-Shoulders Pattern: Bullish Reversal on the Horizon?

Cardano’s 4-hour chart reveals a clean inverse head-and-shoulders (H&S) pattern, a formation known for signaling the start of a bullish trend. The neckline of this pattern is situated near the $0.671 level, which now acts as both a psychological and technical barrier. The combination of rising sentiment, network activity, and the inverse H&S pattern enhances the probability of a breakout. If ADA convincingly breaches the $0.671 level, the pattern suggests an upside target around $0.80, which would represent a significant move for ADA holders.

What’s Next for Cardano?

With increasing sentiment, rising network participation, and a bullish technical setup, Cardano appears poised for a potential breakout. The key level to watch is $0.671, which could trigger a rapid move toward the $0.80 zone if bulls manage to push past it. While there is some caution due to the slight dip in liquidity, the overall structure remains positive for ADA.

If ADA clears $0.671 and manages to trigger a short squeeze, the chances of a swift rally toward $0.80 increase significantly. Traders and investors will be keeping a close eye on this critical price level, as it could set the stage for the next leg of Cardano’s bullish momentum.