The value of ADA has recorded an increase of nearly 3% recently, hovering around $0.26 while the general crypto market remains mostly stagnant. Through an emerging technical bounce structure, there is speculation about a potential Cardano price reversal, although on-chain and derivatives data suggest that this movement lacks the necessary institutional backing.
Ananda Banerjee, a renowned financial analyst, highlights that there is a clear conflict between improving technical signals and weak conviction from institutional investors. Although the chart pattern mimics previous bullish behaviors, the absence of active participation from large wallets casts doubt on the sustainability of the current upward momentum of ADA during this session.
Bullish divergence versus massive whale distribution
Since early December, the asset has built a familiar structure where the price marks lower lows while the RSI shows higher lows. This bullish divergence, which usually appears near local bottoms, suggests that selling pressure is gradually decreasing, allowing buyers to try to retake control of the market momentarily during this current trading day.
On the other hand, whale behavior differs drastically from what was observed in the December rally, where they accumulated assets aggressively. Currently, large holders have reduced their exposure from 13.67 to 13.3 billion ADA, reflecting a clear trend of institutional distribution that weakens the technical basis of any recovery attempt sustained over time for the project.
Likewise, the derivatives market shows a drop of more than 50% in open interest since the peaks reached in early January. Since strong rallies require the participation of leverage, the lack of capital committed in long positions limits the upside potential, making the momentum depend exclusively on spot purchases to maintain itself without external institutional support.
Why is the exchange inflow threatening ADA’s support levels?
Therefore, the net flow data on exchange platforms has returned to positive territory, signaling an increase in selling pressure. Between February 7 and 11, slight outflows were observed, but the inflow of 1.16 million dollars this Thursday indicates that traders are moving their assets to liquidate positions quickly, thus avoiding holding the asset for the long term.
This lack of commitment from short-term buyers keeps the price under constant pressure near critical levels. However, if the asset successfully manages to overcome the $0.28 barrier, a move toward $0.35 could be attempted, emulating the size of the rebound recorded last December by the bulls, although this scenario currently seems unlikely given the macro conditions.
In contrast, the $0.24 support acts as the first vital line of defense to avoid a further collapse toward $0.22. If this level were to fail, the rebound structure would be completely invalidated, forcing investors to re-evaluate their defensive strategy in the absence of positive catalysts that drive organic demand in the digital asset ecosystem today.
In conclusion, Cardano is caught at a technical crossroads where chart momentum clashes head-on with the distrust of large capital holders. As long as whales continue to distribute their holdings, the possibility of a lasting rally is minimal, which is why a phase of lateral consolidation is expected before the market defines a clear path toward the end of the first quarter.
