Key Takeaways
Cardano’s (ADA) price has increased by 10% after dropping to $0.55 on Tuesday, April 8. Due to the jump, ADA’s value has retested $0.65, bringing back hopes that the altcoin might recover toward $1.
However, this rebound seems to have come with a troubling trend. Specifically, large ADA holders — popularly called whales —are quietly offloading their bags.
This wave of distribution could undermine the current consolidation and set the stage for renewed downside pressure. If the trend continues, here is what could happen to Cardano’s price.
Cardano Whales Dump $65M
On April 8, the total ADA holdings of whales owning between 1 million and 10 million tokens stood at $5.74 billion. As of this writing, that figure has dropped to $5.64 billion — indicating that these large holders have offloaded around 100 million ADA in just one week.
Cardano’s current price translates to roughly $65 million in sell-offs by key stakeholders. Typically, when whales add to their positions, it indicates buying pressure.
In most cases, such a hike in accumulation translated to a higher value. However, the decline in whales’ holdings suggests that ADA’s price is likely to experience a notable downturn as long as this selling pressure continues.
Funding Rate Bearish, No Short Squeeze
Besides that, the funding rate also shows a bearish sentiment around ADA. The funding rate is a recurring payment between long and short traders in perpetual futures contracts — designed to keep the contract price close to the spot price.
If the metric is positive, there is more demand for longs. Negative funding indicates a higher demand for shorts. According to Coinglass, Cardano’s funding rate has dropped to the negative region, validating the bearish sentiment.
Want to add CARDANO ADA to your portfolio? Discover the leading platforms for buying and selling CARDANO ADA on our exchange review page.
The cryptocurrency might not see a short squeeze if the reading does not get extremely negative. A short squeeze is a quick price spike that happens when short sellers are forced to buy back their positions.
It happens when many traders are short (betting price will decrease), indirectly causing even more price acceleration.
Since that is not the case, ADA is unlikely to see increased demand. Instead, Cardano’s price might erase some or all of its recent 10% gain.
ADA Price Analysis: Back to Entry
From a technical standpoint, Cardano’s price recently broke out of a falling wedge on the daily chart. Despite that, the token continues to trade below the 20-period Exponential Moving Average (EMA), which is a key support.
Trading below this support means that the trend around ADA is bearish. In line with this trend, the Relative Strength Index (RSI) has dropped below the neutral line, indicating that the momentum around the token is not bullish.
This position could cause Cardano’s price to fall back to $0.55 if sustained. However, if the cryptocurrency continues to trade above the falling wedge with increased volume and a bullish momentum, this decline might not happen.
ADA could bounce to $0.70 at the 0.382 Fibonacci level in that scenario. In a highly bullish scenario, the altcoin’s market value might rise to $0.94 near the 0.618 golden pocket ratio.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Was this Article helpful?
