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ADA price has been in recovery mode since Wednesday as has been the case with mot cryptocurrencies.
A recent statement by Cardano founder Charles Hoskinson regarding Midnight could potentially give ADA bulls more room for dominance in the coming days.
ADA price extended its recovery in the last 24 hours, during which price rallied as high as $5.51, extending its recovery from recent lows.
The cryptocurrency notably pushed above its $0.62 support level that previously held for 2 months before tariffs forced market capitulation.
Continued recovery from the previous support may offer a confidence boost among investors and possibly attract more liquidity.
ADA price exchanged hands at $0.65 at press time, which was equivalent to a 26% gain from its weekly low.
The cryptocurrency’s MACD indicator shifted back into overall bullish volumes and flashed bullish signal with the MACD line crossing above the signal line.
Can ADA Price Action Keep Up With the Bullish Momentum?
The bulls have been quite suppressed over the last few weeks with any recovery attempts thwarted by short-term profit-taking.
Will a similar situation occur or will ADA price maintain its recovery trajectory a while longer?
On-chain data may offer some insights that may provide some level of clarity over the current level of demand.
For example, spot demand demonstrated less than $1 million worth of inflows.
The limited spot inflows suggest that demand in the spot segment was limited, and not consistent with strong buying pressure. The derivatives segment echoed a similar sentiment.
Derivatives volumes dipped by 23.77% with options volumes declining by a whopping 92.94%.
This meant that the demand observed in the last few days has been cooling off and could potentially pave the way for another short-term profit-taking scenario.
The above outcome is consistent with the fact that the overall market sentiment was still in fear territory.
Investors were therefore concerned that this could just be a calm before the bearish storm continues.
On the other hand, the recent rally may underscore the return of bullish momentum fueled by a cohort of buyers with higher appetite for risk.
This may explain why open interest was still up by 2.74% despite other indicators signaling slowing demand.
ADA funding rates have been leaning on the positive side of things in the last few days.
The ratio of longs versus shorts liquidations also shifted with short traders suffering heavier losses.
Full steam ahead for the Midnight train
Cardano has a new project called Midnight which has been described as a Cardano sidechain.
Hoskinson stated recently that the move could potentially bring millions of users into the Cardano ecosystem.
He also noted that the development will boost interoperability with some of the top blockchains. Hoskinson revealed that Midnight’s launch received a successful uptick in the market.
The big question is whether this development will pave the way for Cardano to compete more effectively with rival networks.
It was reminiscent of the hype in the Cardano community when the blockchain activated smart contracts.
Many expected that Cardano would finally be the Ethereum and Solana killer that it aimed to become.
However, the network remained overshadowed by its main rivals especially in terms of popularity.
A closer look at the Cardano network activity reveals that it maintained healthy activity.
This is despite the fact that it was significantly affected by the bearish market conditions over the last few months.
Cardano’s daily DEX volume has consistently been hitting well above $1 million per day since the start of April.
For context, it clocked $2.58 million in the last 24 hours. Token volume hovered around $823 million during the same period.
