3 reasons why the price of Cardano will continue to fall
The price of Cardano has increased again, but the result seems familiar. ADA is up roughly 7% since January 20th, briefly pushing higher before stalling and settling around $0.35. This was not a breakup. It was another riot that failed to build a sequel.
Three factors explain why Cardano's price surge continues and why the same configuration remains in place.
Reason 1: A weak underlying bullish divergence triggered the advance.
The recent move was triggered by a bullish divergence lurking on the 12-hour chart. Between late December and January 20, the ADA price posted a higher low and the RSI posted a shallower low.
Sponsored
That's a detail. A shallow RSI low suggests that selling pressure has eased slightly, not that buyers have taken over. This type of divergence often leads to a short-term recovery, not a sustained rally.
Want more token insights like this? Sign up for Harsh Notaria's daily crypto newsletter here
And that's what happened. Cardano's price rose 7% to $0.37 on January 21, but the move quickly stalled.
Time explains why. On January 21, when the price was close to $0.37, Cardano's Growth Activity Score peaked around 6.94, the highest in a month.
Development activity reflects how much work is being done on the chain and often supports price confidence. In mid-January, the local ADA price's high growth activity closely followed the local high.
That didn't stop with development support. Growth slipped, bringing prices down with it. It is now up to 6.85, but the monthly high has not been broken. The difference stalled sales, but development stalled and didn't generate enough demand to raise it.
Sponsored
Reason 2: The higher the price of Cardano, the higher the booking speeds
The big problem is what happens after Cardano starts moving up.
Expending Coins Age Band tracks how much coins in all age groups are moving. Rising prices usually indicate selling and profit booking. In the past month, the movement of spending coins has seen a sharp increase following each price increase.
By the end of December, Cardano's price had risen by nearly 12%, while the coin's spent activity had jumped more than 80%, showing strong selling. ADA was up nearly 10% in mid-January, and experienced a near 100% coin move, again confirming that holders took advantage of the rally to exit positions.
The same behavior is now returning. Since January 24, the movement of spent coins has increased more than 11% from 105 million to 117 million, although the price of ADA has not yet broken higher. This indicates that sellers are likely to place themselves ahead of another throw rather than waiting for confirmation.
This is why the momentum is fading. Each support test results in faster profit taking than the last.
Sponsored
Rationale 3: Whales reduce exposure, not take away sales.
Typically, whales help absorb this sales pressure. Currently, they are not.
Wallets between 10 million and 100 million ADA saw their balance reduced from 13.64 billion ADA to 13.62 billion ADA, down from 20 million ADA as of January 21st. ADA
These are not shock exits, but clear net reductions. That whale's lack of interest is now being swallowed up by profitability, leaving prices vulnerable to downward pressure.
Initial data reinforce this weakness. Over the next seven days, short liquidity will be around $107.6 million and long liquidity will be around $70.1 million. Shorts are weighted more than 50% long, which indicates that traders are waiting for the decline rather than extending the rally.
Sponsored
This disequilibrium means the market expects selling pressure to quickly return if Cardano attempts another swing, especially near resistance.
Cardano price levels that determine what happens next
The price structure now makes things more clear.
On the upside, $0.37 remains the first critical level. A clean break and hold over it will trigger a brief flush and provide temporary relief. However, $0.39 is very important. A move above this zone destroys most of the remaining shorts and marks the first meaningful change in momentum. Beyond that, $0.42 is the level at which the broader structure could break down again.
On the upside, $0.34 is key support. A loss of this level would wipe out many remaining long stretches and could accelerate low pressure while reducing winds.
For Cardano to escape this cycle, three things need to be fixed. Development activity should recover and hold above recent highs. The movement of the coins you spend should slow down rather than rise to the top. And the whales should return as net buyers.
Until then, Cardano inflation is vulnerable.
