After reaching a peak of $1.327, Cardano [ADA] has encountered challenges in sustaining an upward trajectory. Currently, it has dipped to a low of $0.911.
This downturn has presented an opportunity for major holders to enter the market. Consequently, significant holders have seized the chance to purchase during the decline, as highlighted by the renowned cryptocurrency analyst, Ali Martinez.
Significant Acquisition of 80 Million ADA by Cardano Whales
As per Martinez’s assessment, whales in the Cardano ecosystem have embarked on a buying spree. Their accumulation over the past 48 hours amounts to more than 80 million ADA tokens.
The accumulation of ADA by whales signifies their optimistic outlook regarding the future valuation of the market.
In the past two days, as whales accumulated assets, the price of ADA surged from $0.93 to $1.182 before retracing to $1.09.
This price movement indicates that despite the heightened accumulation by whales, a bearish sentiment still grips the market, with bears exerting notable influence.
Interpreting the ADA Charts
While increased whale acquisitions typically generate upward pressure on prices, the prevalence of bearish trends in ADA currently outweighs any bullish stance.
Presently, ADA is exchanging hands at $1.09, marking a 6.42% daily decline and an 8.51% slump on the weekly charts.
Therefore, the prevailing market conditions reveal that market participants inclined towards selling and bearish sentiments are steering the market direction.
This bearish outlook becomes apparent from the predominance of short positions among traders. With the Long/Short Ratio indicating a market favoring short positions at 52.1%, it signals an expectation of further price dips by most investors.
Moreover, this bearish stance may potentially arise from a perception in the market that the recent surge has potentially rendered ADA overpriced.
Signs of overvaluation emerged from the negative Price DAA Divergence, which persisted throughout the past week.
A persistently negative DAA divergence suggests that the recent price upsurge has surpassed network activity, pointing towards speculative purchases rather than robust underlying fundamentals.
Furthermore, the escalating NVT ratio, surging from 10.85 to 70.94, adds weight to the overvaluation narrative. A rising NVT ratio often indicates that the market cap or price surge is outpacing transaction volume, hinting at a potential overpricing of ADA, with the price hike not being substantiated by a simultaneous network activity surge.
Consequently, despite the surge in whale accumulations which typically propels prices, the prevailing strength of ADA bears remains evident. Coupled with potential overvaluation signals, ADA appears poised for a further market correction to align with its intrinsic value.
If this trend persists, ADA may retreat to $0.93. Conversely, a resurgence by buyers could see the altcoin reestablishing its position above the $1.2 resistance level.