- 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?
In a bullish 24 hours, most altcoins have posted double-digit gains. Cardano [ADA] stands out, surging 10% and inching toward the $1 mark after weeks of sluggish consolidation.
Amidst this, a question arises: Is this ADA’s breakout moment, the perfect chance to buy the “dip”? Or just another speculative frenzy waiting to fizzle out?
Shorts retreat as New Year brings fresh spark
Cardano’s price action tells an interesting story. While Bitcoin [BTC] soared to a new all-time high of $108K in mid-December, Cardano’s trajectory diverged.
Beginning in early December, ADA entered a bearish downtrend. This suggested a possible disconnect from the broader market rally.
With ADA peaking at $1.25, it looks like profit-taking kicked in, especially with the RSI flashing signs of being overbought.
Even more telling, the ADA/BTC pair has been making lower lows, signaling that Bitcoin holders aren’t rushing to load up on Cardano. This lack of fresh capital has left ADA in a slump.
But now, with Q4 behind us and Bitcoin still holding a defined range, we’re seeing a new year rush as investors diversify into high-caps.
The short-sellers? Caught off guard, leading to a whopping $107 million in short liquidations.
The market’s turning green and that short squeeze has triggered a bullish ripple effect across the board. Cardano isn’t left out either, with $1.78 million getting squeezed.
But don’t get ahead of yourself. It’s not all smooth sailing yet. For Cardano, breaking through that $1 mark in the next few days is key.
It’s more than just a price point – it’s the trigger for FOMO to kick in, drawing fresh capital and sparking interest from investors eyeing diversification.
Thus, holding $1 is Cardano’s next big test
Breaking $1 is one thing, but holding it is another, and that’s a challenge Cardano struggled with in Q4. Three failed attempts in December alone showed how the lack of retail capital led to deeper pullbacks.
In comparison, Ripple [XRP] has been able to break through two major psychological levels and held steady at $2, even during a market-wide crash.
This stark contrast might give investors a pause. With little capital flowing from BTC into ADA in Q4, that recent 10% jump might just be a short-term bounce.
Rivals are closing in, and the battle for dominance is far from over.
But here’s the kicker – just before the new year, large holders pulled 3.5 million ADA off exchanges, sparking the recent surge and forcing short-sellers to scramble and buy back the asset.
Source: IntoTheBlock
While this could give Cardano a temporary boost, flipping $1 into solid support remains elusive.
Why?
Unless the ADA/BTC pair can replicate the November cycle, posting long green candlesticks, whales alone won’t be able to sustain the rally.
Read Cardano’s [ADA] Price Prediction 2025-26
The next few days remain crucial. If BTC stays moderately active, investors could funnel capital into ADA. But the real test will be whether whales can break $1 and hold it.
Otherwise, this short squeeze could quickly unravel, sending ADA back into the slump.
