Key Takeaways

• Cardano rallied 23% this week, but on-chain signals and equal liquidations hint at a possible distribution phase ahead. Will ADA revisit $3 this year, or get stuck below?

At press time, Cardano [ADA] posted a 3.52% gain in the past 24 hours, taking its 7-day return over 23%. The recent rally has pushed the altcoin into a high-profit territory, but this might not be all good news.

Is Cardano’s 23% Rally a Warning for a Market Correction?

Market indicators suggest that ADA could soon become overbought, and investors seem to be adjusting accordingly at press time. This aligns with AMBCrypto’s forecast for the altcoin.

Profit-taking could trigger the next market drop

At the time of writing, Cardano’s Net Unrealized Profit and Loss (NUPL) stayed significantly above zero, indicating most holders were in profit. 

Historically, such profitability often precedes a decline, as investors move to lock in gains, triggering a downtrend.

With ADA climbing, signs of a distribution phase have started to emerge.

Alphractal’s Joao Wedson echoed this caution, citing a short-term cooling period before ADA possibly rallies past $3 by October or November.

Interestingly, he targets $4.90 as his selling zone.