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Cardano could experience a liquidity expansion in alignment with the PMI, and this concept is drawing optimism amid the ongoing correction.
The current sideways trend has seen Cardano plunge back towards a key support area following an earlier bounce in February. After rallying 14% in a single day on February 25 from the $0.24-$0.26 support, bears stepped in as usual, dragging the price down again. Yet, an interesting setup is developing for Cardano amid this correction.
Key Points
- Cardano could experience a liquidity expansion in alignment with the PMI, and this concept is drawing optimism amid the ongoing correction.
- A recent ISM report showed that the Manufacturing PMI stands at 52.4%, up for the second straight month in February.
- Historically, the increase in this indicator has coincided with an influx of liquidity into the market and, essentially, the start of a rally.
- Cardano has undergone a reset following the recent stochastic RSI and price breakdown to bear-market lows.
Is Cardano Cooking with the PMI Recipe?
Market veteran Dan Gambardello highlighted this interesting development in a recent commentary shared on X. He notes that he is so bullish on Cardano and altcoins in general, issuing a warning to market bears waiting on further downturns.
What is fueling this strong conviction is the expected liquidity expansion for Cardano and the broader crypto sector. According to him, the industry is shifting from contraction to abundance amid the recent resurgence of the Purchasing Managers Index (PMI).
For the uninitiated, the PMI is a monthly economic metric that tracks the manufacturing sector’s performance. Key indicators for this parameter include new orders, employment data, production, and supplier deliveries.
Gambardello cited a recent ISM report showing that the Manufacturing PMI stands at 52.4%, up for the second straight month in February. Most notably, it was only the third time in 40 months that this indicator had increased, indicating strengthening economic activity in the manufacturing sector.
Historically, the increase in this indicator has coincided with an influx of liquidity into the market. The analysis highlighted a past event in 2020 when a combination of quantitative easing and PMI expansion sparked an $ADA rebound to unprecedented prices in 2021. These two factors are in play for the coin, and optimism is rising.
$ADA Price Reset
Technically, Gambardello highlighted what he termed a Cardano reset using the Stochastic RSI. His shared chart shows that the indicator has been forming a series of lower highs and lower lows since 2024. Meanwhile, when analysts expected another leg up and an eventual breakout from a forming descending neckline resistance, the indicator broke down.
This capitulation aligned with the start of the steep price pullback in the receding part of 2025, with $ADA dropping over 70% from its September highs to its current price level around $0.27. The strong bearish trend, which saw the Stochastic RSI drop into oversold territory and $ADA to the previous cycle’s lows, led to a reset.
With things starting to align fundamentally for Cardano. Gambardello says he is very bullish on $ADA. Meanwhile, the analysis did not highlight the price bottom level or targets when this upsurge kicks off.
What Needs to Happen for a Cardano Rally
Nonetheless, for this to happen, other macro factors need to align too. Crypto struggled over the weekend amid the renewed tension between Israel, the US, and Iran, and prolonged confrontations of that nature could hamper sentiments.
Additionally, $ADA would need to maintain current support and begin targeting higher resistance levels. Holding the $0.24 support opens the way to reclaiming $0.38 and other higher price targets subsequently. However, nothing is guaranteed at the moment.
