Cardano’s ‘centralization’ concerns put a 30% ADA price crash in the game

Cardano (ADA) price fell 7.25% to reach 0.474 on May 22, two days after cryptocurrency analyst Justin Bones accused the blockchain project of being too centralized.

Bones argued that Input Output Global (IOG), Cardano's parent company, controls 5 of the 7 blockchain “Genesis Keys” cryptographic keys used to sign and establish the first block of the Cardano blockchain in 2015.

“Genesis Keys allows code changes to be issued seamlessly without a hard fork,” the analyst said:

“This means that IOG can stop the chain, change release schedules, censor and more. That means unprecedented centralized control of the L1 chain.”

After Boggs' comments, the ADA decline triggered a bearish setup that could lead to another 30% price crash in June.

ADA risks a triangle collapse in the future.

Cardano's sustained correction comes after a common downtrend resistance is met, which is part of the current symmetrical triangle pattern.

A symmetrical triangle in a downtrend is considered a bearish continuation pattern, which is characterized by the formation of two related trends: one up and the other down. According to technical analysis, this pattern is after the price breaks below the lower trend line and goes down to the height of the upper triangle.

Since May 22, ADA price has been correcting after testing the upper trend line of the triangle. It has now seen an extended retracement to a trend low around $0.44, down 6.5% from current price levels at the end of May.

A critical symmetric triangle breakout could send ADA price down to around $0.336-0.366—roughly 20-25% of current price levels, depending on the breakout point.

Brightly, ADA price is rising after testing the support of a multi-month rising trend line.

A broader rally is possible if the price breaks the 50-3D (red wave) and 200-3D (blue wave) exponential moving averages (EMA). If so, ADA's initial upside target would be $0.67, around 35% from current price levels.

The $0.67 level served as resistance in December 2023 and May 2022.

Cardano's whales are accumulating.

Cardano's ongoing price adjustment coincides with a small increase in the wealthiest addresses in the ADA offering, indicating that these whales have ignored Boggs' warning about Cardano's alleged centralization.

For example, entities holding 10 million-100 million ADA (black) and 100 million-1 billion ADA (teal) tokens have increased their holdings in the past 24 hours. This trend shows that most whales are buying inflation in order to make more profit.

Broadly speaking, the 10 million-100 million population group shows a sharp increase in ADA holdings around the end of March, followed by some stabilization. Meanwhile, the 100 million – 1 billion group has steadily increased, especially since mid-March.

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During this period, the price of ADA has fallen by more than 20%, suggesting that most of the Cardano whales will see the price increase further in the long term.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.