Cardano’s 10% jump sparks hope – But can ADA break above $1?

Cardano is finally catching some wind in its sails again as fresh ‘new year’ zeal kicks in.
Could this be the start of a strong recovery for ADA?

As a seasoned analyst with over two decades of market observation under my belt, I must say that the recent surge in Cardano [ADA] is certainly intriguing. The new year rush has indeed brought a fresh spark to the market, but whether it’s the start of a strong recovery for ADA remains to be seen.

Looking at the price action, we can see a pattern that hints at profit-taking and overbought conditions in late December. However, the recent short squeeze has triggered a bullish ripple effect across the board, with Cardano not being left out. But let’s not get carried away just yet – breaking through $1 is crucial, and holding it will be the real test for Cardano in the coming days.

The stark contrast between Cardano and its rival Ripple [XRP] in Q4 might give investors a pause. The lack of capital flowing from BTC into ADA might suggest that this recent 10% jump could be just a short-term bounce. But then again, the recent large holder action could give Cardano a temporary boost.

In my experience, markets can sometimes be as unpredictable as a game of chess, with pieces moving in ways you least expect. So, while I’m not ready to make any bold predictions just yet, I do find it amusing that the market often behaves like a cat chasing after a laser pointer – always one step ahead, never quite within reach, and when you think you’ve got it, it disappears only to reappear again. So, let’s see if Cardano can finally catch its ‘laser point’ and hold onto $1!

In the last 24 hours, many altcoins have seen significant increases with gains in the double digits. Notably, Cardano [ADA] has jumped by 10%, moving closer to the $1 threshold following a period of relatively slow progress.

In light of this situation, one might ponder: Could this be the defining moment for ADA, an ideal opportunity to acquire at a reduced price (the “dip”)? Or is it merely another instance of hype that could soon dissipate?

Shorts retreat as New Year brings fresh spark

The movement of Cardano’s price offers an intriguing narrative. Unlike Bitcoin [BTC], which hit a record-breaking high of $108K around mid-December, Cardano followed a different path.

Starting around early December, ADA exhibited a downward trend, which hinted at a potential divergence from the general bullish momentum of the broader market.

As ADA reached a high of $1.25, it appears that investors decided to cash in their gains, noticeable also due to the Relative Strength Index (RSI) indicating an oversold market condition.

Furthermore, it’s quite evident that the trend between ADA and BTC is showing lower troughs, indicating that Bitcoin investors are not actively purchasing Cardano. This stagnation of new funds has resulted in a downturn for Cardano.

With my years of investment experience under my belt, I’ve learned that the end of each quarter often brings new opportunities for portfolio diversification. This time around, as Q4 has concluded and Bitcoin remains within a clear price range, I’m witnessing a fresh wave of investor interest in high-cap stocks. This trend is reminiscent of past market cycles, where investors tend to seek stability and growth potential in established companies at the start of a new year. As always, it’s essential to conduct thorough research and consider one’s investment goals when making decisions in this dynamic market.

The short-sellers? Caught off guard, leading to a whopping $107 million in short liquidations.

The market is becoming greener, and the recent short squeeze has caused a wave of optimism throughout various sectors. Even Cardano hasn’t escaped this trend, as it experienced a significant short-term squeeze worth approximately $1.78 million.

However, let’s stay grounded. The journey for Cardano isn’t completely smooth just yet. Reaching over a dollar within the upcoming days is crucial.

Beyond merely focusing on the cost, it triggers fear of missing out (FOMO), attracting new investment funds and piquing investor curiosity who are seeking diversification opportunities.

Thus, holding $1 is Cardano’s next big test

In a nutshell, maintaining a dollar’s worth of value, rather than just acquiring it, has proven to be quite a test for Cardano during the last quarter. The market saw three unsuccessful attempts in December itself, which clearly demonstrate that insufficient retail investment can lead to more significant downturns.

Compared to other cryptocurrencies, Ripple (XRP) managed to surpass two significant resistance points and maintained its value at approximately $2, holding strong even in the midst of a broader market downturn.

The significant difference between Bitcoin (BTC) and Cardano (ADA) could cause investors to reconsider their decisions. The scarcity of funds moving from Bitcoin to Cardano during the fourth quarter may suggest that the recent 10% increase in ADA’s value might be a temporary surge rather than a sustained trend.

Rivals are closing in, and the battle for dominance is far from over.

Interestingly, around New Year’s time, significant investors withdrew approximately 3.5 million ADA from exchanges. This action fueled the current increase in price, leaving short-sellers with no choice but to repurchase the asset.

While this could give Cardano a temporary boost, flipping $1 into solid support remains elusive.

Why?

If the ADA/BTC pair doesn’t repeat its November pattern by continuing to grow with longer bullish candles, even the influence of the whales may not prolong the rally on their own.

Read Cardano’s [ADA] Price Prediction 2025-26

Over the coming days, the situation is pivotal. Should Bitcoin continue its moderate activity, investors may channel their funds towards Cardano (ADA). However, the true challenge lies in whether large-scale investors, or ‘whales,’ can successfully push the price above $1 and maintain it there.

Otherwise, this short squeeze could quickly unravel, sending ADA back into the slump.

2025-01-02 14:16

Shorts retreat as New Year brings fresh spark

Thus, holding $1 is Cardano’s next big test

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