the price of Cardano (ADA) has decreased by nearly 23%, maintaining pressure on the cryptocurrency’s valuation. However, recent market data indicates a potential shift, as major investors, often referred to as “whales,” have started to increase their ADA holdings. This development raises questions about whether these investors are anticipating a rebound or acting prematurely. The focus on whale activity is significant due to their potential influence on market trends.
A closer examination of Cardano’s price movements reveals that the cryptocurrency is currently navigating a falling wedge pattern on its daily chart. This technical formation, characterized by two converging descending trendlines, typically leads to a sharp price movement as the trading range narrows. Notably, from November 21 to December 18, while Cardano’s price registered lower lows, the Relative Strength Index (RSI), a momentum indicator, exhibited higher lows. This divergence suggests that selling pressure might be diminishing, especially as it occurs near the wedge’s lower boundary, indicating solid support levels.
The accumulation of ADA by large holders further corroborates this observation. According to on-chain analytics, wallets holding between 100 million to 1 billion ADA increased their balances from 3.74 billion to 3.75 billion ADA within 48 hours, a rise equivalent to approximately $3.6 million. More substantial purchases came from holders of 1 million to 10 million ADA, whose collective holdings surged from 3.84 billion to 5.60 billion ADA, representing an influx of around $634 million into the market.
These activities suggest a strategic acquisition by large investors, potentially positioning themselves for a future price recovery. However, it is important to note that this does not confirm an imminent reversal in Cardano’s price trend. For these bullish expectations to materialize, ADA needs to surpass critical resistance levels. Specifically, a daily close above $0.48 would lend credibility to rebound hopes, although it must first navigate through resistance zones between $0.39 and $0.42. Failure to break through these levels could result in the continuation of the current consolidation phase, keeping the price within the wedge pattern.
Despite these bullish signals and increased whale activity, Cardano’s broader market trend remains in a downtrend, posing ongoing risks. The lower boundary of the wedge pattern, situated just above $0.33, serves as a critical support level. A decisive break below this point could invalidate any short-term bullish outlook, exposing the cryptocurrency to further declines with $0.29 representing the next significant support level. Such a scenario would indicate a reassertion of the bearish trend currently affecting Cardano.
Looking ahead, investors will be closely monitoring Cardano’s price action for any signs of a sustainable upward trajectory. Given the current market environment, it remains to be seen whether the recent accumulation by whales will translate into a broader market recovery or if further declines are on the horizon. The coming weeks will be crucial in determining whether Cardano can reverse its fortunes and establish a new upward trend.
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