Cardano (ADA) has recorded a 7% price uptick in the last 24 hours as it seeks to gradually clear the downtrend of the past month. This marks a significant turn from the downward path ADA has been on recently, leading some market participants to wonder if the move is a “dead cat bounce” event. In the last 30 days, Cardano’s price had plummeted by over 22% and more than 5% in seven days.
Renewed altcoin risk appetite drives Cardano bounce
As per CoinMarketCap data, Cardano outperformed the broader cryptocurrency market, climbing from a daily low of $0.2546 to a peak of $0.271. This bullish move has sparked concerns of a possible dead cat bounce at play, which could trap bulls.
For perspective, a dead cat bounce refers to a momentary recovery period in the price of an asset that pushes the price up sharply. It usually occurs after a significant decline over time. So, when its price ascends, bulls consider this a rally and rush to acquire the asset, only to get trapped when it continues its previous downward journey.
A critical look at the asset’s performance suggests that it is largely beta-driven by Bitcoin’s direction and general market sentiment. Notably, Bitcoin (BTC) soared from around $62,000 to $66,000, breaching the $65,000 resistance level. Cardano is likely to sustain the price reversal if BTC stays above the $65,000 mark.
Additionally, the sentiment toward riskier assets like altcoins has improved across the sector. This has allowed Cardano to ride the wave of positive sentiment on the altcoin market. If the momentum lingers, ADA traders might not experience a dead cat bounce scenario.
As of this writing, Cardano exchanges hands at $0.2693, which represents a 4.78% increase. The current price shows ADA has slipped slightly from its earlier gains. While this might spark volatility concerns, the asset’s trading volume remains green.
Cardano’s open interest and bullish continuation
Cardano’s volume is up by 0.94% to $413.38 million within the same 24-hour time frame under consideration. If volume stays up and ADA’s price holds above the $0.26 support, it could avoid the potential reversion of its new rally.
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As U.Today reported, the $0.28 to $0.30 price zone remains a crucial support level for Cardano. The coin was trading at this level before mid-February, when it plunged downward amid market uncertainty. The asset’s earlier climb was triggered by bullish developments in the ecosystem.
In order to support ADA’s climb, open interest, which previously dropped below $500 million because of traders’ cautious approach, also needs to rebound. Such a development might help Cardano sustain this spike in price.