Cardano (ADA) has recently shown signs of bullish momentum, with its breakout above the $1.065 resistance level fueling optimism. At the time of writing, ADA is trading at $1.07, reflecting a slight 0.05% increase. This recent price action has fueled the possibility of Cardano reaching its next target of $1.77, but there are several factors that could influence its ability to maintain upward momentum.

Price Action Points to Bullish Sentiment

Cardano’s price movement suggests a positive trend, particularly with its breakout from a descending wedge pattern. This technical formation often signals potential upward movement, and ADA’s ability to hold above $1.065 is a key indicator for further gains. If the cryptocurrency manages to push past the next resistance at $1.172, it could pave the way for a rally toward the $1.77 target.

However, there’s a risk of a pullback if Cardano fails to maintain support at $1.065, which could offer buying opportunities for traders looking to enter at lower prices.

The NVT Ratio: A Cautionary Signal?

The Network Value to Transaction (NVT) ratio for Cardano has surged to 40.6, signaling that the network’s valuation is rising faster than its transaction volume. This sharp increase in the NVT ratio often indicates heightened investor interest, which can be a bullish sign. However, it also raises a red flag about potential overvaluation, suggesting that caution may be warranted. Traders should closely monitor transaction volume to assess whether this surge in value is sustainable.

Daily Active Addresses Reflect Growing Engagement

One positive indicator for Cardano is the rise in daily active addresses, which have reached 40,591. This suggests that there is increasing engagement on the network, validating its growing user base. A sustained rise in active addresses often leads to price stability and can instill long-term confidence among investors. However, for ADA to continue its rally, maintaining this level of network activity will be crucial.

Overbought Conditions and Technical Indicators

Cardano’s Stochastic RSI, at 86.29, signals that ADA is in the overbought zone, which can indicate strong bullish momentum but also warns of a potential pullback if buying pressure eases. Traders should be cautious, as any slowdown in buying activity could trigger a short-term correction. Additionally, the Average True Range (ATR) at 0.0920 suggests moderate volatility, highlighting the need for careful navigation during price fluctuations.

Strong Development Activity Bolsters Long-Term Outlook

A key driver behind Cardano’s potential growth is its robust development activity, which has rebounded to 38.71, up from a low of under 20 in December 2024. This rebound demonstrates the network’s commitment to ongoing innovation and expansion. With regular updates and community-driven projects, Cardano continues to attract developers, which strengthens its ecosystem and reinforces its long-term growth narrative.

Conclusion

Cardano’s breakout and rising network activity, coupled with solid development progress, suggest that ADA could be poised to reach its next price target of $1.77. However, traders must be cautious of overbought conditions, which could trigger short-term corrections. If Cardano can maintain its momentum and continue attracting users and developers, it could see sustained growth and further price appreciation. The coming weeks will be crucial in determining whether ADA can consolidate its gains and reach new highs.