This coin has the potential to stand out and be the best altcoin bet for 2022

The Cardano price has been an attractive investment since the March 2020 pandemic crash. ADA rose a staggering 17,600% in less than a year and a half, reaching an all-time high of $3.11. This impressive rally has seen a massive setback since the fourth quarter of 2021 and shows no signs of stopping. This downswing in particular makes ADA one of the best altcoins to bet on for the next leg-up.

Technical data reveals an opportunity

ADA Perpetual Futures | Source: Tradingview

Cardano price has been loyal to the $1 psychological level since it was first tagged on Feb. 9, 2021. Since then, ADA has broken the said barrier about eight times, with the most recent retest on Feb. 3. Shortly thereafter, ADA cut below the significant level and is currently hovering above the $0.843 level that could make or break Cardano.

The $0.843 support level is vital for several reasons, so a breach of this barrier could crash ADA by 56% to $0.397 and is rightly referred to as ‘max. pain scenario’. There are two main reasons why such a steep and violent downtrend is to be expected.

Fair Value Gap (FVG): This technical setup is formed when an asset’s price moves quickly away from a point, creating inefficiency. Often times, as momentum dries up, the asset explores lower and fills this gap. For Cardano, this FVG extends from $0.365 to $0.746 and was formed when the ADA rose 224% between January 28, 2021 and February 9, 2021. Since this resurgence, the Ethereum killer has failed to fill this gap. Therefore, a breakdown of $0.843 will be a catalyst driving market makers to pressure ADA to fill this gap. Volume profile gap: The volume profile indicator is used to identify the clusters or areas where the maximum volume of trades occurred. These clusters or spikes often serve as critical support or resistance levels that help determine a potential pivot point.
For ADA, the volume profile narrows significantly from $0.843 to $0.398 from 2021 to 2022. Interestingly, the FVG is a subset of this range and further supports the possibility of a massive crash to $0.398 if it crosses the $0.843 support level.

Interested investors can start by averaging their dollar investment at current levels and leave some bids around $0.40.

ADA Perpetual Futures | Source: Tradingview

This outlook for ADA supports the 365-day Market Value to Realized Value (MVRV) model. This indicator is used to identify the average profit/loss of investors who have purchased ADA in the past year.

Currently, the 365-day MVRV is hovering around -50%, indicating that a majority of holders are at a loss. The last time this indicator was this low was in March 2020 due to the pandemic. As mentioned above, the pandemic crash served as a perfect opportunity to accumulate, leading to huge profits. Therefore, a repeat of this would indicate that Cardano will be an altcoin to watch closely.

MVRV ratio | Source: Saniment

Assuming ADA retests $0.40, this would indicate that the downside threat is void and a reversal is likely. Confirmation of the rebound or bull rally will arrive after ADA produces a higher high above the volume point of control at $1,238.

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