Cardano (ADA) is currently trading near its yearly lows after months of underwhelming price action. Since early August, the price has struggled to hold above the crucial $0.36 level. This shift has left ADA in a precarious position, with investors and traders watching for signs of a potential recovery.
Data from IntoTheBlock highlights a significant drop in whale activity over the past month, raising concerns about further downside pressure. The decrease in large transactions suggests that major holders may be stepping back, adding to the likelihood of a deeper correction for the altcoin.
If ADA fails to break above the $0.36 resistance in the coming days, a 30% retrace to lower demand levels seems inevitable. Market participants are awaiting confirmation of either a breakout or further declines as the broader market remains uncertain. The next few days will be crucial for determining Cardano’s short-term direction.
Cardano Whales Leaving Early?
Cardano is at a crucial liquidity level, with on-chain metrics indicating a potential for further decline, especially given the significant decrease in whale activity. Recent data from IntoTheBlock highlights a concerning trend: ADA whales, or large investors, have increasingly sold their holdings over the past month. This trend is evident in the 100% fall in ADA’s large holders’ netflow, which refers to the balance between the amount of the coin these addresses buy and the amount they sell.
Large holders are addresses with over 0.1% of Cardano’s circulating supply. When the flow declines, these investors sell more coins than they buy, signaling a potential loss of confidence in Cardano. This lack of confidence often trickles down to retail investors, leading them to sell their holdings.
The drop in ADA’s whale concentration over the past month confirms this selling activity, raising concerns about ‘Smart Money’ potentially exiting the Cardano ecosystem. If this trend continues, it could push ADA below its current liquidity level, resulting in a deeper correction.
Market participants are closely monitoring these developments, as the exit of large holders could signal a bearish sentiment that may lead to a significant price decline. As Cardano navigates this critical phase, investors will watch for signs of recovery or further weakness in the coming days.
Key Levels To Watch
Cardano (ADA) is currently trading at $0.35 after experiencing days of choppy price action below the critical $0.36 resistance level. The price is 15% below the 1D 200 exponential moving average (EMA) at $0.40, a key area of resistance that bulls must overcome to reverse the prevailing downtrend. This crucial level was lost in April, and since then, ADA has failed to close above it four times.
If the price continues to struggle, a deeper correction to fresh yearly lows at $0.25 could be in store. Such a move would represent a significant 30% retracement from current levels, further intensifying bearish sentiment in the market. Investors are aware of these critical price points, as a failure to reclaim the EMA and break through the $0.36 resistance may lead to increased selling pressure.
Traders will look for signs of strength or weakness in ADA’s price action to determine the likelihood of a potential breakout or a more profound decline in the coming days.
Featured image from Dall-E, chart from TradingView