Cardano Experiences Significant Decline but Shows Signs of Recovery
Cardano (ADA) has dropped nearly 20% over the last 24 hours, marking a 30-day decline of 26.2%. This downturn pushed ADA to a multi-week low; however, it’s managed to recover somewhat, resting around $0.65.
The recovery appears to be fueled by two significant groups: whales and retail investors, both of whom are increasing their stakes as prices decrease. But, can they truly overcome the weak technical indicators and initiate a real upswing?
Whales and Retailers Collaborate
Amidst widespread market anxiety, Cardano whales have quietly been accumulating more ADA. Data from Santiment indicates that the wallets holding between 10 million and 100 million ADA increased their holdings from 13.06 billion on October 10 to 13.2 billion today. That’s an addition of 140 million ADA, valued at about $89.6 million based on the current price of $0.64.
This accumulation started right before the recent crash and has remained steady (no significant sell-offs occurred during the downturn). This consistency hints that big holders might be anticipating stability or an eventual recovery.
Money flow indexes (MFIs), which measure the cash flow in and out of assets based on price and volume, support this theory. The MFIs have developed higher lows, signaling capital inflows even with declining prices. This suggests that retail traders are also joining forces with the whales, enhancing their buying power, which might be the foundation for a slow recovery in Cardano prices.
Technical Risks Continue to Loom Over Cardano
Despite the positive signs, there are still three key technical risks to be aware of.
The Smart Money Index (SMI), which tracks the positioning of professional traders, has sharply declined and hasn’t shown signs of recovery. Despite a slight rebound, it’s too feeble to assure traders aiming for a sustained upswing.
The RSI, which gauges buying and selling momentum strength, unfortunately doesn’t reflect a bullish divergence. During the crash, while ADA price hit new lows, the RSI did too, indicating that momentum isn’t yet shifting positively.
While the RSI is currently at 30, suggesting that ADA could be oversold, the absence of a divergence points to a potentially slower recovery compared to other prominent altcoins.
Moreover, ADA’s ongoing downtrend continues to form a bearish triangle pattern on the daily chart. Without a counteracting bullish RSI divergence, this trend implies that downside risks still loom, making the current rebound potentially fragile unless buyers manage to secure higher closing levels.
Currently, ADA is trading around $0.64. If it closes above $0.68, a short-term recovery towards $0.76 and $0.89 could be on the horizon. Conversely, a dip below $0.61 might lead to further declines, possibly down to $0.55.
