Cardano (ADA) experienced a significant price decline of nearly 20% in a 24-hour period, pushing its 30-day losses to over 26%. Despite the sharp drop, the token found support and began a recovery attempt, driven by substantial buying from both large-scale investors, known as whales, and retail traders.
While the asset's price fell to its lowest point in several weeks, on-chain data reveals that major holders increased their positions, signaling confidence in a potential stabilization or future price increase. This accumulation presents a conflicting picture against several technical indicators that continue to suggest underlying market weakness.
Key Takeaways
- Cardano (ADA) dropped nearly 20% in 24 hours before attempting a recovery toward the $0.65 level.
- Large investors holding between 10 million and 100 million ADA acquired an additional 140 million tokens, valued at approximately $89.6 million.
- Retail traders also showed buying interest, as indicated by the Money Flow Index (MFI) forming a higher low despite the price decline.
- Several technical indicators, including the Smart Money Index (SMI) and Relative Strength Index (RSI), suggest the recovery may be fragile.
- Key price levels to monitor are resistance at $0.68 and support at $0.61, which could determine the short-term direction for ADA.
Market Sell-Off Meets Strong Buying Pressure
The cryptocurrency market recently faced a broad sell-off, and Cardano was among the assets most affected. The price of ADA fell sharply, extending its monthly losses and reaching a multi-week low. However, the decline was met with a notable increase in buying activity, allowing the price to rebound from its lows and trade near the $0.65 mark.
This recovery attempt is not based on a market-wide shift in sentiment but rather on the specific actions of two distinct investor groups. Large-scale investors and smaller retail participants both began accumulating ADA tokens as the price became more attractive, creating a support level that halted the immediate downward trend.
Understanding Market Dynamics
In financial markets, a sharp price drop can trigger two primary reactions: panic selling from fearful investors or strategic buying from those who believe the asset is undervalued. The current situation with Cardano highlights this division, where some market participants exited their positions while others saw an opportunity to enter or add to theirs.
Whale Wallets Add Nearly $90 Million in ADA
While many investors were selling, Cardano's largest holders were quietly increasing their positions. According to data from the analytics firm Santiment, wallets holding between 10 million and 100 million ADA have been in a clear accumulation phase.
Between October 10 and the recent market crash, these whale addresses increased their collective holdings from 13.06 billion to 13.20 billion ADA. This represents an addition of 140 million tokens to their balances.
At the current price of approximately $0.64 per token, the 140 million ADA accumulated by these large wallets is valued at $89.6 million. This significant investment during a period of market fear suggests a long-term bullish outlook from some of the most influential market players.
The timing of this accumulation is also critical. These investors began adding to their holdings just before the price crash and continued to buy throughout the sell-off without liquidating their positions. Such consistent buying behavior indicates a strong conviction that the asset's price will either stabilize or rebound in the near future.
Retail Traders Follow the Whales' Lead
The buying pressure was not limited to large investors. Data suggests that retail traders also participated in accumulating ADA during the price dip. This trend is visible through the Money Flow Index (MFI), a technical indicator that measures the flow of money into and out of an asset.
The MFI formed a higher low while the price of ADA was making a lower low. This pattern, known as a bullish divergence, indicates that capital was flowing into the asset even as its price was falling. It suggests that smaller investors were buying the dip, adding to the support created by whales.
"The combined buying activity from both whale and retail segments can create a strong foundation for a price recovery. When both large and small investors share conviction, it often signals a potential shift in market momentum."
This alignment between different investor groups is a positive sign for Cardano's short-term prospects. A broad base of buyers can provide the necessary strength to absorb selling pressure and fuel a gradual price increase.
Three Technical Risks Signal Caution
Despite the encouraging accumulation from buyers, several technical indicators present a more cautious outlook, suggesting that Cardano's recovery could face significant hurdles. These risks temper the optimism generated by the on-chain buying activity.
Smart Money Index Remains Weak
The Smart Money Index (SMI) tracks the positioning of professional traders and institutional investors. This indicator dropped sharply during the sell-off and has yet to show a meaningful recovery. While there has been a slight upward curve, the movement is too weak to confirm that professional traders are confident in a sustained rebound. The lack of participation from this group could limit the recovery's potential.
RSI Lacks Bullish Confirmation
The Relative Strength Index (RSI), which measures the speed and change of price movements, also fails to provide a strong bullish signal. During the crash, ADA's price created a lower low, and the RSI followed suit by also printing a lower low. This confirms that selling momentum remained strong and has not yet reversed.
An RSI value of 30 indicates that ADA is in "oversold" territory, which can sometimes precede a price bounce. However, without a bullish divergence (where the price makes a new low but the RSI makes a higher low), any rebound is likely to be slower and more fragile compared to other assets showing stronger momentum.
Bearish Chart Pattern Looms
Adding to the technical concerns is a persistent bearish pattern on Cardano's daily price chart. A descending trendline has formed a bearish triangle, a structure that typically suggests further downside risk. Without a strong bullish catalyst to invalidate this pattern, the price remains vulnerable to another leg down if buying pressure subsides.
Cardano's Path Forward: Key Levels to Watch
Currently, the price of Cardano is at a critical juncture. Its short-term direction will likely be determined by its ability to overcome key technical levels.
The primary resistance to watch is at $0.68. A daily close above this level would be a strong bullish signal, potentially invalidating the bearish chart pattern and opening the door for a recovery toward higher targets at $0.76 and eventually $0.89.
On the other hand, the immediate support level is at $0.61. If sellers regain control and push the price below this point, it would confirm the existing weakness and could lead to a further decline toward the next major support level at approximately $0.55.
