Cardano has staged yet another short-term recovery, but the outcome looks increasingly familiar. Since January 20, ADA has gained roughly 7%, briefly pushing higher before stalling and stabilizing near the $0.35 region. This move did not mark a breakout — it was another rebound that failed to generate follow-through.
Despite repeated attempts, Cardano continues to struggle in building sustained upside momentum. Three structural factors help explain why these recoveries keep failing — and why the same setup remains unresolved.
1. A Weak Hidden Bullish Divergence Sparked the Bounce — Not Real Demand
The latest recovery was triggered by a hidden bullish divergence on the 12-hour chart. Between late December and January 20, ADA printed a higher low in price while RSI formed a slightly lower low.
That distinction matters. A shallow RSI lower low suggests selling pressure eased, not that buyers took control. Historically, this type of divergence often produces short-lived relief bounces, not trend reversals.
That’s exactly what played out. ADA rallied roughly 7% to $0.37 on January 21, only to stall almost immediately.
Timing adds further context. As price approached $0.37, Cardano’s development activity score peaked near 6.94, the highest level in about a month. Development activity often supports market confidence, but this surge failed to sustain. Once activity cooled, price followed.
Currently, development metrics have recovered slightly to around 6.85, but remain below the prior peak. The divergence paused downside momentum — it did not generate enough demand to push price through resistance.
2. Profit-Taking Accelerates Every Time ADA Rallies
The more persistent issue emerges after each bounce.
The Spent Coin Age Bands metric — which tracks the movement of coins across all age groups — has consistently surged following every upside attempt. Rising values here typically indicate distribution and profit-taking.
Late December: ADA rose ~12%, while spent coin activity jumped over 80%
Mid-January: ADA gained ~10%, while spent coin activity surged nearly 100%
Since January 24: spent coin activity increased from ~105M to ~117M, despite price failing to break higher
This pattern shows that market participants are using strength to exit positions rather than accumulate. Each recovery attempt faces faster and heavier selling than the one before it, steadily weakening momentum.
3. Whales Are Reducing Exposure Instead of Absorbing Supply
Normally, whale accumulation helps absorb this type of selling pressure. This time, it hasn’t happened.
Wallets holding 10M–100M ADA reduced balances by ~20M ADA since January 21
Wallets holding 1M–10M ADA shed nearly 10M ADA starting January 22
These are not panic exits — but they are clear reductions. Without whale absorption, profit-taking flows directly into price pressure.
Futures data reinforces this weakness. Over the next seven days:
Short liquidations: ~$107.6M
Long liquidations: ~$70.1M
Short exposure exceeds long exposure by over 50%, suggesting traders expect rallies to fail rather than extend.
Key Levels That Will Decide What Comes Next
Upside levels to watch:
$0.37: First major resistance. A clean break and hold could trigger short liquidations.
$0.39: Structural level. A move above would signal a meaningful momentum shift.
$0.42: Zone where broader bullish structure could re-emerge.
Downside risk:
$0.34: Critical support. Losing this level could accelerate downside as remaining long leverage unwinds.
What ADA Needs to Break This Cycle
For Cardano to escape this pattern, three conditions must align:
Development activity must reclaim and sustain recent highs
Spent coin activity must slow during rallies, not accelerate
Whales must return as net buyers, not distributors
Until then, Cardano remains vulnerable to repeated relief bounces that fail beneath resistance.
This content is for informational and educational purposes only and does not constitute financial advice. Always conduct your own research before making any investment decisions.
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