- Cardano is now trading within a consolidation channel, similar to the one that led to its massive 2021 rally.
- Investors are accumulating ADA more than in the past period, which could influence the anticipated rally.
Cardano [ADA] has been on a downtrend for the past month, dropping 12.13% — this performance has weighed on the asset.
However, this downward trend could result in a positive market rally, as analysis reveals a similar movement occurred in 2020, leading to ADA’s rally and eventual all-time high.
Cardano falls within a consolidation pattern again
Interestingly, ADA’s current weekly chart closely mimicked the structure that led to its 2021 rally.
In 2021, after breaching the supply zone marked by the orange rectangle, the asset returned to this level, consolidated for weeks, and then broke out, reaching $3.10.
Similarly, the current movement closely mirrors that path as it breached the supply zone and is now consolidating within it.
Source: TradingView
If this leads to a rally, the closest target for the asset would be its all-time high of $3.10, a 457% gain for investors buying at the current price.
However, strong market momentum could extend the rally, pushing the asset to $16.
Market accumulation gives the asset a major edge
On top of that, market accumulation has quietly supported ADA’s current consolidation.
Coinglass weekly Exchange Netflow data, which tracks asset inflows and outflows to gauge accumulation or distribution, confirms this trend.
Investors have accumulated ADA for the past seven weeks, purchasing the asset and storing it in wallets for long-term holding.
This group has acquired $379 million worth of ADA—a significant portion of the market—indicating strong interest.
Source: CoinGlass
For context, the ADA purchased during this period represents 1.7% of its current market capitalization of $22 billion.
This implies that this cohort of investors could trigger a supply squeeze, reducing availability and driving up demand.
AMBCrypto analysis took it further by comparing the momentum from this accumulation to the one that led to ADA’s 2020–2021 rally.
Interestingly, between the 7th of September and the 16th of November of the last cycle, when ADA also remained in a consolidation channel, only $9.57 million worth of the asset was accumulated.
This means the current accumulation rate is 39.6 times more than during the previous rally cycle. If accumulation continues to rise, ADA’s rally could surpass its previous all-time high and reach the $16 region.
How’s the market reacting?
Despite the drop in ADA’s price, sentiment remains bullish, even in the derivatives market, as the Open Interest Weighted Funding Rate remains high.
Reading at 0.0086% at press time, this indicates that more long contracts are being opened.
Source: CoinGlass
Continual long bets on lower timeframes will contribute to the asset’s eventual long-term rally, if sustained.