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Cardano (ADA) is currently trading near its yearly low after months of disappointing price action. Since early August, the price has struggled to stay above the crucial $0.36 level. This shift has put ADA in a precarious position, with investors and traders watching for signs of a possible recovery.
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Data from IntoTheBlock indicates a significant decline in whale activity over the past month, raising concerns about further downward pressure. The decline in large transactions suggests that large holders may be taking a step back, increasing the chances of a deeper correction for the altcoin.
If ADA fails to break the USD 0.36 resistance in the coming days, a 30% return to lower demand levels seems inevitable. Market participants await confirmation of a breakout or further declines as the broader market remains uncertain. The coming days will be crucial in determining Cardano’s near-term direction.
Cardano whales leaving early?
Cardano is at a crucial liquidity level, with on-chain data pointing to the potential for further decline, especially given the significant decline in whale activity. Recent data from IntoTheBlock highlights a troubling trend: ADA whales, or major investors, have increasingly sold off their assets in the past month. This trend is evident in the 100% drop in the net flow of ADA’s large holders, which refers to the balance between the amount of coins these addresses buy and the amount they sell.
Large holders are addresses with more than 0.1% of Cardano’s circulating supply. When the flow diminishes, these investors sell more coins than they buy, indicating a possible loss of confidence in Cardano. This lack of confidence often trickles down to private investors, forcing them to sell their investments.
The drop in whale concentration at ADA over the past month confirms this selling activity, raising concerns that ‘Smart Money’ may leave the Cardano ecosystem. If this trend continues, it could push the ADA below current liquidity levels, resulting in a deeper correction.
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Market participants are closely watching these developments as the departure of major holders could signal bearish sentiment that could lead to a significant price decline. As Cardano moves through this critical phase, investors will be watching for signs of recovery or further weakness in the coming days.
Important levels to watch
Cardano (ADA) is currently trading at $0.35 after days of choppy price action below the critical resistance level of $0.36. The price is 15% below the 1D 200 exponential moving average (EMA) of $0.40, a key resistance area 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 new yearly lows of $0.25 could be in store. Such a move would mark a significant 30% return from current levels, further strengthening bearish sentiment in the market. Investors are aware of these critical price points as the inability to reclaim the EMA and break the USD 0.36 resistance could 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 possible breakout or deeper decline in the coming days.
Featured image of Dall-E, chart from TradingView