Why is Cardano (ADA) Price Up? Sponge V2 May Soon Steal the Spotlight

Cardano’s native token, ADA, has been on an upward trajectory since mid-October, rising from around $0.24 to the current level of approximately $0.64. In just the last 24 hours, ADA has surged nearly 7%.

Technically, ADA appears to be trading in an Ascending Triangle pattern on its chart. In this bullish continuation pattern, $0.65 is acting as resistance. Traders are watching to see if ADA can break above this level, which would signal a continuation of the uptrend with potential to reach $0.75 next.

An Ascending Triangle is a continuation pattern where the price moves between an ascending resistance line and a horizontal support line. Most traders wait for a definitive breakout above resistance before entering a long position. However, swing traders could trade between the trendlines, buying at support and selling at resistance, as long as the lines remain far enough apart.

Source: altFINS

In terms of momentum indicators, the picture is mixed for ADA currently. The Moving Average Convergence Divergence (MACD) line sits below the signal line, which is considered bearish. However, the Relative Strength Index (RSI) reads above 55, indicating bullish momentum.

Looking at support and resistance levels, the nearest significant support zone is around $0.46, which aligns with previous resistance turned support. Below that sits support between $0.40 and $0.42. To the upside, ADA faces resistance at $0.65, followed by $0.75.

ChartMonkey analyst just tweeted bullish commentary on ADA, saying:

“ADA is forming an ascending triangle pattern and looks ready for a breakout. A successful breakout could potentially lead to a gain of 40% or more. Monitor the price movement carefully for an opportunity to capitalize on this.”

Here, the analyst is highlighting the bullish nature of ADA’s chart pattern. He expects that a decisive break above $0.65 resistance could spur a rally of 40% or more from current levels. Traders should watch closely for an upside breakout as a potential trading opportunity.

Despite this positive price action, some Cardano on-chain metrics have actually deteriorated lately. According to data from Artemis, the number of unique wallet addresses transacting on the network daily has dropped 46% since December 9th.

Due to fewer unique wallets overall, the count of daily transactions on Cardano has also fallen almost 35% from its December 9th peak of 113,030. As of December 25th, more than 75,000 transactions were registered on-chain.

Additionally, while rival layer 1 networks have posted surging decentralized finance (DeFi) growth recently, Cardano’s total value locked (TVL) has declined 23% in the last 7 days. Currently, Cardano DeFi projects have $440 million in total value locked, per DefiLlama data. Still, this represents a more than 750% increase in TVL on a year-to-date basis.

Sponge V2 Poised to Mimic Predecessor’s Success

The whimsical world of meme coins often produces ephemeral success stories that shine brightly before quickly flaming out. However, Sponge V2 has an established track record that could enable it to replicate its predecessor’s parabolic 100x price explosion.

Sponge V2 represents the second iteration of Sponge, a meme coin that briefly reached a $100 million market capitalization during the massive meme mania of May 2023. Given that pedigree, analysts believe Sponge V2 is well-positioned for similarly exponential growth.

A key part of Sponge V2’s strategy centers around a unique “stake-to-bridge” model to distribute tokens. This mechanism incentivizes staking the original V1 token to earn newly minted V2 tokens before the official launch. Stakers receive more V2 tokens the longer and more V1 they commit to the bridge contract.

Currently, the only way to buy Sponge V2 is on the Sponge website.

Tokens will be staked in the project’s smart contract until the “buy and stake” campaign is over, and they will earn an additional yield based on a variable staking APY in the meantime

Unlike its predecessor, Sponge V2 also integrates play-to-earn gaming elements. The P2E racer allows players to accumulate points and earn rewards while spending tokens within the ecosystem.

After the original Sponge’s brief yet wildly successful run earlier this year, the team now has its sights set on replicating that exponential success with V2 in early 2024. Upgraded features and token distribution mechanics lay the groundwork for another potential moonshot.

For now, Sponge V2 remains unavailable for open trading. The only way to acquire tokens is by staking the original V1 token on the Sponge.vip website. The tokens will remain staked in the smart contract until the “buy and stake” phase concludes. In the meantime, stakers can earn additional yield based on a variable APY.

This innovative staking model provides opportunities for both new and existing Sponge investors to gain exposure to the highly anticipated V2 token. With the original delivering triple-digit returns already, hopes are high that lightning can strike twice for this rebranded meme coin.