Cardano’s ADA/BTC Pair Shows Bullish Divergence: A Potential Repeat of 2020’s Rally?

• ADA/BTC shows a bullish divergence, echoing a 2020 pattern that led to a 1,000% rally.  
• ADA exhibits more volatility than BTC, with sharper price peaks and drops in recent trading.
• Cardano’s current market patterns hint at potential upside, but caution is advised due to market factors.

The Cardano (ADA) to Bitcoin (BTC) trading pair has once again shown a notable pattern that previously led to a massive price surge. A bullish divergence on the ADA/BTC daily chart has caught the attention of traders, echoing a similar scenario from four years ago when Cardano experienced a 1,000% rally against Bitcoin.

In technical analysis, a descending wedge pattern often indicates a potential bullish reversal, and this pattern is currently evident in the ADA/BTC chart. A descending wedge formed in 2020 led to a significant breakout for Cardano, pushing its value sharply upward. 

Source: Dan Gambardello

According to Charles, during that period the RSI was in a bullish divergence; the RSI was rising while the price was falling. This correlation signaled that a reversal in the price was due soon and it kept diverging further and further. 

 Presenting the similar pattern of the descending wedge the same pair of ADA/BTC reinforced with the third bullish divergence on the RSI in the present chart. This pattern has traders waiting, to observer if they will be accosted by a large breakout as had been seen in the prior attempts. 

However, as reported by the pattern it is not impossible to have an upside which might be realized depending on the current market and other external forces that are at play which is why the pattern ought to be traded cautiously. 

As of the latest data, Bitcoin is trading at $57,001.54, reflecting a 0.48% increase over the past 24 hours. The leading cryptocurrency by market cap currently has a circulating supply of 19,749,790 BTC, with a maximum supply capped at 21 million coins.

Cardano, ranked 11th by market cap, is currently priced at $0.320775, showing a 1.40% gain in the same period. It has a circulating supply of 35,960,643,044 ADA coins, with a maximum supply set at 45 billion coins. Despite its relatively lower market cap, Cardano’s price movements have demonstrated more pronounced volatility compared to Bitcoin.

A comparison of the price movements of Bitcoin and Cardano during the same period reveals that ADA has been more volatile, with sharper peaks and drops compared to Bitcoin’s steadier performance. This volatility could present both opportunities and risks for traders.

Source: CoinMarketCap

While the bullish divergence on the ADA/BTC chart draws parallels to the 2020 rally, traders should remain vigilant and consider all market factors before making decisions. The potential for another breakout is there, but market conditions will ultimately dictate the outcome.