Cardano flashes 2020-style whale signal, yet ADA drifts lower - Why?

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Cardano flashes 2020-style whale signal, yet ADA drifts lower – Why？

Cardano [ADA] is a major crypto, but has continued to decline even when most altcoins saw slight recoveries.

The altcoin season index climbed above 40 in the past two weeks, but the ADA price continued to tighten to the downside.

However, whales are not letting this discount go unnoticed. They are back to record levels in terms of accumulation, but will this salvage the altcoins weak prices？

Cardano whale holdings hit record levels in years

As per Santiment data, wallets with at least 1 million ADA, referred to as whales, held 25 billion tokens. This is the highest level since late 2017, when whales held about 22.85 billion tokens.

At press time, these whales controlled more than 67% of the ADA supply. This was another record since July 2020. In 2020, Cardano rallied from $0.23, the current price, to around $3 during the altcoin season of 2021.

Source: Santiment

The data suggests that big players, such as institutions and whales, are confident in their ability to gain, indicating a bullish outlook for the long term.

ADA price in compression

On the charts, the altcoin has been consolidating in what appears to be a triangular pattern. The price of Cardano [ADA] continued to compress within the pattern, confirming that whales are accumulating.

Usually, technical patterns like these often indicate positioning, be it for big investors or retailers.

The MACD still shows sellers are in control and gaining strength, which could take ADA to this years low of $0.22. The Cumulative Volume Delta (CVD) further denotes the selling activity after 29.62 million ADA were cashed out.

Source: ADA/USDT on TradingView

Historical price data showed that every time Cardano hit the $0.220 – $0.236, buyers have stepped in. However, for the trend to change, the technical outlook must align with the capital inflow from whales.

With whales positioning, ADA price might reverse, but the signal is for those patient enough to hold.

In the short term, the altcoin remains bearish until it turns the slanting resistance around $0.28 into support.

Liquidity grows but activity remains low

Notably, liquidity was growing with the stablecoin market cap on Cardano hitting $52.15 million. This was a 12% growth in just a week.

However, other key metrics were declining. The number of transactions and Active Addresses were at 24.74K and 16.48K, respectively.

These figures were relatively low alongside the Total Value Locked (TVL), which declined by 2.25% to around $148.75 million.

Source: DeFiLlama

Therefore, whale activity and liquidity growth were bullish, but the technical outlook and network activity were bearish. This contrast explained why ADA price action was stalling around the same levels for months.