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Cardano (ADA) is currently trading near its annual low after months of bearish price action. Since early August, the price has struggled to hold above the key $0.36 level. The change has left ADA in a precarious position, with investors and traders looking for signs of a possible recovery.
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Data from IntoTheBlock highlights a sharp drop in whaling activity over the past month, raising concerns about increased pressure. The decrease in large transactions suggests that major holders may be pulling back, adding to the possibility of a deep correction for the altcoin.
If ADA fails to break the $0.36 resistance in the coming days, a 30% retracement to lower demand levels seems inevitable. Market participants are waiting for confirmation of exits or further declines as the broader market remains uncertain. The next few days will be crucial in determining Cardano’s short-term direction.
Cardano Whales Moving Ahead?
Cardano is at a critical level of liquidity, with on-chain metrics showing the possibility of further declines, especially given the significant decline in whale activity. The latest data from IntoTheBlock highlights a concerning trend: ADA whales, or large investors, have been selling their holdings heavily this past month. This trend is characterized by a 100% fall in the netflow of the largest ADA holders, which refers to the balance between the amount of money these addresses buy and the amount they sell.
Major holders are the addresses of more than 0.1% of Cardano’s circulating supply. When the flow slows, these investors sell more coins than they buy, indicating a potential loss of confidence in Cardano. This lack of confidence often trickles down to retail investors, leading them to sell their assets.
The drop in ADA whale traffic last month confirms this sales activity, raising concerns about ‘Smart Money’ potentially leaving the Cardano ecosystem. If this trend continues, it could push the ADA below its current funding level, leading to a deep correction.
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Market participants are closely monitoring these developments, as the exit of major holders may indicate a bearish sentiment that could lead to a significant price drop. As Cardano navigates this critical phase, investors will be watching for signs of recovery or further weakness in the coming days.
Key Points of View
Cardano (ADA) is currently trading at $0.35 after experiencing days of choppy price action below the key resistance level at $0.36. The price is 15% below the 1D 200 exponential moving average (EMA) at $0.40, the main resistance area that the bulls must overcome to reverse the current decline. This key level was lost in April, and since then, the ADA has failed to close above it four times.
If the price continues to struggle, a deep correction to the annual decline of $0.25 is possible. Such a move would represent a significant retracement of 30% from current levels, further reinforcing bearish sentiment in the market. Investors are aware of these key price points, as failure to retrace the EMA and breakout of the $0.36 resistance may lead to increased selling pressure.
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Traders will look for signs of strength or weakness in ADA’s price action to determine the likelihood of a breakout or a deeper decline in the coming days.
Featured image from Dall-E, chart from TradingView
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