The price of Cardano has rebounded again, but the results remain unchanged. Since January 20, ADA has risen by about 7%, temporarily testing higher prices but losing momentum, settling around $0.35. This is not a breakout, and once again, it has only been a temporary rebound that failed to chase higher prices.
There are three reasons why the price rebound of Cardano has repeatedly failed and why the same situation continues.
Reason 1: Weak hidden bullish divergence induced the rebound.
The recent rebound was triggered by a hidden upward divergence that occurred on the 12-hour chart. Between late December and January 20, ADA prices set higher lows while the RSI updated a very shallow low.
This difference is important. A shallow RSI low update indicates that selling pressure has somewhat eased, but it does not mean buyers have gained the upper hand. This type of divergence tends to only lead to short-lived rebounds and is less likely to result in a sustained upward trend.
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Indeed, the situation unfolded just as expected. The price of Cardano rebounded by about 7% to $0.37 on January 21, but that movement quickly hit a ceiling.
Timing was also a factor. When prices approached $0.37 on January 21, Cardano's development activity score reached approximately 6.94, marking a high level not seen in about a month.
Development activity shows how much development is progressing on the chain, often leading to price stability. In mid-January, ADA's local high emerged following a peak in development activity.
However, the development-led support did not last long. As development activity slowed, prices also fell. Currently, the development score has recovered to around 6.85, but has not surpassed last month's high. The RSI divergence contributed to a halt in the decline but, combined with stagnation in development activity, did not lead to sufficient demand to chase higher prices.
Reason 2: Profit-taking surged during the rise in Cardano's price.
What’s more serious is the trend after Cardano started to rise.
The "coin consumption age band" is an indicator that measures the amount of coin movement for all holding periods, and an increase in value indicates stronger selling or profit-taking movements. Over the past month, this indicator has skyrocketed every time there was a price rebound.
In late December, Cardano showed an increase of about 12%, but "coin consumption activity" surged over 80%, indicating that there was vigorous selling during the upward phase. In mid-January, ADA rose by about 10%, and coin consumption activity also surged nearly 100%. This confirms that holders were liquidating their positions during this rise.
The same movement is appearing again. Since January 24, despite ADA prices not breaking yet, coin consumption activity has increased by about 11%, reaching between 105 million and 117 million. This indicates that sellers are preemptively adjusting their positions in anticipation of another rebound.
In this way, momentum does not sustain. Every time a rebound occurs, profit-taking sales happen faster than in the past.
Reason 3: Whales are not absorbing sales and are risk-averse.
Originally, whales were supposed to absorb such selling pressure, but that is not the case now.
Wallets holding between 10 million and 100 million ADA have decreased from approximately 13.64 billion ADA to 13.62 billion ADA since January 21, a reduction of about 20 million ADA. Since January 22, wallets holding between 1 million and 10 million ADA have fallen from about 5.61 billion ADA to around 5.6 billion ADA, a decrease of about 10 million ADA.
None of these are panic selling, but rather a clear net reduction. Due to a lack of whale demand, profit-taking sales are not being absorbed, and once a decline begins, the ADA price is more likely to face additional downward pressure.
Data from the derivatives market also supports this weakness. The liquidation amount for short positions over the next 7 days is approximately $176 million, while the liquidation amount for long positions is about $10 million. This indicates that shorts exceed longs by over 50%, suggesting traders expect failure rather than a continuation of the rise.
This bias suggests that even if Cardano attempts to rebound again, especially near resistance, selling pressure is expected to return quickly.
Key price range that will influence Cardano's future.
The current price structure has clarified the situation.
At higher levels, $0.37 becomes the first important level. If it can be clearly broken and maintained, it may trigger short liquidations and provide temporary relief. However, $0.39 is an even more important point. If this zone is surpassed, it could lead to the liquidation of many remaining shorts, potentially marking the first real sentiment shift. If it rises to $0.42, the entire market could trend upward again.
At lower levels, $0.34 is a major support. If this level is broken, many remaining long positions could be liquidated, and due to leverage unwinding, downward pressure could rapidly increase.
For Cardano to break free from this cycle, three conditions must be met. Development activity must reclaim and maintain recent highs. The movement of spent coins during the bounce must not accelerate and should be calm. Whales must return to the market as net buyers.
Until then, Cardano's price rebounds will continue to remain in a fragile state.
