The Cardano price has risen again, but the outcome seems known. Since January 20, ADA has risen about 7%, with a brief breakout upward before stagnating around $0.35. This was not a breakout. It was again a bounce that was not followed up.
There are three reasons why the increases in the Cardano price repeatedly fail, and why the same pattern keeps coming back.
Reason 1: Weak hidden bullish divergence caused the bounce
The last increase was caused by a hidden bullish divergence on the 12-hour chart. Between late December and January 20, the ADA price made a higher low, while the RSI only showed a very slight lower low.
That detail is important. A slight lower low in the RSI means that the selling pressure became just a little less, and not that buyers took over. This kind of divergence usually leads to short recoveries, not long rises.
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Exactly this happened. The Cardano price rose about 7% to $0.37 on January 21, but the movement stopped quickly.
The timing explains why. On January 21, when the price was around $0.37, Cardano's development activity peaked around 6.94, the highest level in about a month.
Development activity shows how much work is being done on the chain and often strengthens confidence in the price. In mid-January, the local ADA price peaked shortly after a local peak in development activity.
That support from development did not hold. Development activity declined, and the price went down with it. Now it is around 6.85 again, but the highest monthly level has not been broken. The divergence did stop the selling, but it did not create enough demand to rise further as development stagnates.
Reason 2: Profit-taking peaks whenever the Cardano price rises.
The bigger problem is what happens after Cardano goes up again.
The 'spent coins age band' shows how many coins of all ages are being moved. Higher values often indicate selling and profit-taking. Over the past month, every rise has been followed by a strong increase in activity of moved coins.
At the end of December, the Cardano price rose about 12%, while the activity of moved coins increased by more than 80%. This shows that a lot of profit was taken during the rise. In mid-January, ADA rose about 10% and the activity of moved coins almost doubled, confirming that holders used the rally to sell.
Now we see the same thing. Since January 24, the activity of moved coins has already increased by more than 11% from 105 million to 117 million, while the ADA price has not yet broken higher. This indicates that sellers are already preparing for a new rise, instead of waiting for confirmation.
That’s why the momentum is fading. Every attempt to rise now leads to profit-taking even faster than before.
Reason 3: whales are reducing their positions and not taking sales.
Normally, whales absorb some of this selling pressure. But at this moment, that is not happening.
Wallets holding between 10 million and 100 million ADA have reduced their balance from about 13.64 billion ADA to around 13.62 billion ADA, a decrease of about 20 million ADA since January 21. From January 22, wallets holding 1 million to 10 million ADA have decreased from about 5.61 billion to around 5.60 billion ADA, which is nearly 10 million ADA less.
These are not panic sells, but clear net decreases. Due to the lack of demand from whales, the profits are no longer being absorbed, leaving the price vulnerable to declines when they come.
Data from the derivatives market confirms this weakness. In the coming seven days, around $107.6 million in short liquidations are expected, while long liquidations are around $70.1 million. Shorts are more than 50% larger than longs, indicating that traders expect price increases not to continue, but to fail.
This imbalance shows that the market expects selling pressure to return quickly when Cardano tries a new recovery, especially near resistance.
Cardano price levels that determine what is happening now.
The price structure makes it clearer now.
At the top, $0.37 remains the first important level. If the price clearly breaks above here and stays, shorts will be liquidated and a short-lived relief is likely to follow. However, $0.39 is even more important. If the price really moves above this, most remaining shorts will be liquidated and there will be a real change in momentum for the first time. After that, the level at $0.42 is where the broader structure can become bullish again.
At the bottom, $0.34 is the main support level. If this level breaks, many remaining long positions will be liquidated, and the selling pressure may quickly increase due to the unwinding of leverage.
For Cardano to escape this cycle, three things must come together. Development activity must rise again to recently reached highs and stay there. The number of spent coins should decrease instead of increasing during recoveries. And whales need to return as net buyers.
Until then, price recoveries of Cardano remain vulnerable.
