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Cardano (ADA) is currently trading near yearly lows after months of disappointing price action. Since early August, the price has struggled to stay above the crucial $0.36 level. This shift has left ADA in a precarious position, as investors and traders watch for signs of a potential recovery.
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Data from IntoTheBlock highlights a significant decline in whale activity over the past month, raising concerns about further downward pressure. A decline in large transactions indicates that holders of major coins may pull back, increasing the likelihood of a deeper altcoin correction.
If ADA fails to break the $0.36 resistance level in the coming days, a 30% rebound to lower demand levels seems inevitable. Market participants are waiting for confirmation of the breakout or further declines as the broader market remains uncertain. The next few days will be crucial to determine Cardano’s short-term direction.
Are Cardano whales leaving early?
Cardano has a crucial liquidity level, with on-chain metrics pointing to the potential for further decline, especially in light of the significant decline in whale activity. Latest data from IntoTheBlock It highlights a worrying trend: ADA whales, or large investors, have increasingly sold their holdings over the past month. This trend is evident in the 100% decline in the net inflow of major ADA holders, which indicates the balance between the amount of currency these addresses are buying and the amount they are selling.
Large holders are addresses holding more than 0.1% of Cardano’s circulating supply. When the flow decreases, these investors sell more coins than they buy, indicating a possible loss of confidence in Cardano. This lack of confidence often trickles down to individual investors, leading them to sell their holdings.
The decline in the concentration of whales in ADA over the past month underscores this selling activity, raising concerns about the potential exit of “smart money” from the Cardano ecosystem. If this trend continues, it may push ADA below its current liquidity level, leading to a deeper correction.
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Market participants are watching these developments closely, as the exit of major holders may signal bearish sentiment that could lead to a significant price decline. While Cardano is going through this critical phase, investors will be watching for signs of recovery or further weakness in the coming days.
Key levels to watch
Cardano (ADA) is currently trading at $0.35 after seeing 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) at $0.40, which is a key resistance area that the bulls must overcome to reverse the prevailing downtrend. It lost this crucial level in April, and since then, ADA has failed to close above it four times.
If the price continues to struggle, there could be a deeper correction to new yearly lows at $0.25. 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 failure to reclaim the moving average and break through the $0.36 resistance could lead to increased selling pressure.
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Traders will look for signs of strength or weakness in ADA price action to determine the likelihood of a potential breakout or deeper decline in the coming days.
Featured image by Dall-E, chart from TradingView