Cardano (ADA) has experienced a significant drop this week, with losses extending for a third consecutive day on Tuesday. Large investors, often called whales, are stepping back as retail interest diminishes, leading to a decline in both ADA futures open interest and funding rates over the last 24 hours. With bullish momentum fading, the technical outlook for ADA appears to be taking a slightly bearish turn.
Whale interest and retail speculation eases
Demand for Cardano is decreasing among major wallets and retail investors, raising concerns that the gains from last week may evaporate. Data from Santiment indicates that over 1 billion ADA holders controlled 3.22 billion ADA on Tuesday, keeping their holdings relatively unchanged since last Friday. A similar stabilization trend is evident in the group holding between 100 million and 1 billion ADA, totaling nearly 2.53 billion ADA since Thursday.
On the retail front, CoinGlass reports an 8% dip in ADA futures open interest (OI) over the past 24 hours, now sitting at $434.34 million, signaling a significant reduction in leveraged positions. Concurrently, funding rates dropped to 0.0029% from 0.0093% the previous day, indicating that traders are moving away from purchasing long ADA contracts at a premium.
Total liquidations during this timeframe reached $1.66 million, primarily driven by long-term positions totaling $1.26 million, reinforcing the diminishing buy-side advantage in Cardano derivatives.
Cardano risks a major correction below the 50-day EMA
As of Tuesday, Cardano is trading around $0.1800, displaying a mild bearish tilt in the short term. It remains below its 50-day exponential moving average (EMA) of $0.1861 and well under its 200-day EMA of $0.2940.
From a technical standpoint, another conclusive close beneath the 50-day EMA could solidify the downward momentum, with the primary support level at the June 26 low of $0.1385, suggesting a potential decline exceeding 20%.
Momentum indicators are showing early signs of weakening, with the moving average convergence divergence (MACD) above the signal line yet the positive histogram shrinking. Additionally, the Relative Strength Index (RSI) is slipping before reaching the overbought threshold of 56, hinting that buying pressure may decrease instead of ramping up.
On the upside, the initial resistance is at the 50-day EMA around $0.1861, and a breakthrough above the daily close is necessary to relieve the current bearish trend before the more distant 200-day EMA at $0.2940 acts as a barrier to upward movement.
