Cardano price forms rare pattern pointing to a Santa Claus rally

Cardano’s price has been trending sideways this month, but a rare chart pattern is pointing to a potential reversal in the coming weeks.

Popular tier-1 cryptocurrency Cardano (ADA) is trading at $1.06, down nearly 20% from this year’s high.

The pullback follows a rally during the crypto bull run that took the cryptocurrency to a multi-year high of $1,327 in November. This decline mirrors the performance of other cryptocurrencies, such as Avalanche (AVAX) and Binance Coin (BNB), which have fallen from their year-to-date highs.

Cardano’s decline coincided with a decline in the total value locked (TVL) in the decentralized finance ecosystem. According to DeFi Llama, Cardano protocols now have over $597 million in total assets, up from last month’s high of around $700 million. The largest protocols in its ecosystem include Liqwid, Minswap, Indigo and Splash Protocol.

Whale activity on Cardano has also slowed down and the number of active addresses in the last 24 hours is below 43,000. Meanwhile, open interest in the futures market continued to decline.

However, several catalysts could push Cardano’s price higher in the short term. For example, rising crypto demand, highlighted by Bitcoin surpassing $106,000, could support ADA. Additionally, Cardano could benefit from a potential ADA ETF listing as early as 2025.

In the near term, the cryptocurrency could also receive support from a “Santa rally”, an event in which asset prices tend to rise ahead of Christmas Day.

Cardano price formed a rare chart pattern Cardano price chart | Source: crypto.news

The daily chart shows that the ADA price made a strong comeback in November after Donald Trump won the election. Since then, it has gradually formed a bullish pennant chart pattern consisting of a long vertical line and a symmetrical triangle. This formation is approaching the confluence point, which indicates that a bullish breakout may occur.

Cardano has also formed a golden cross pattern where the 50-day and 200-day Exponential Moving Averages are trending upward.

As a result, Cardano is likely to see a strong uptrend in the coming days. If this were to happen, the cryptocurrency could rise to this year’s high of $1,325, which would represent a 23% increase from its current level. However, a decline below the $1.00 support would invalidate the bullish view.