Whales and retail investors support the price of Cardano (ADA) to bounce back despite bearish signals.

Currently, Cardano (ADA) has fallen nearly 20% in the last 24 hours, extending the loss over 30 days to 26.2%. This decline has pushed the price down to its lowest level in weeks; however, ADA has shown signs of bounce back near the level of 0.65 USD.

Factors Driving Recovery Efforts

The two main groups contributing to this bounce back effort are large investors ( whales ) and retail investors. Both groups are increasing their level of participation as prices fall. However, the question is whether they can overcome the weak technical signals and spark a true recovery.

The accumulation of whales and retail investors

In the context of a panic-stricken market, Cardano whales have quietly increased their holdings. Data from Santiment shows that the number of wallets holding between 10 million ADA and 100 million ADA has risen from 13.06 billion on October 10 to 13.20 billion today — corresponding to an increase of 0.14 billion ADA, worth approximately 89.6 million USD at the current price of 0.64 USD.

Cardano Whales | Source: SantimentThis accumulation action started just before the decline and shows no signs of slowing down (they did not sell during the decline). This stability amidst the market-wide sell-off indicates that large investors are anticipating stability or a recovery in the future.

The Money Flow Index (MFI) — which tracks the amount of money flowing in and out of an asset based on price and volume — also supports this assessment. The MFI has formed a higher low, indicating that capital is still flowing in even as prices fall.

Retail investors of Cardano participate in action | Source: TradingViewThis indicates that retail investors seem to be joining forces with the whales, increasing buying power and laying the groundwork for a gradual recovery of Cardano's price.

Three technical risks to be aware of

Despite the encouraging accumulation, there are still three technical risks that need to be addressed.

The Smart Money Index (SMI) — measuring the position of professional investors — has fallen sharply and shows no signs of bounce back. Although there has been a slight uptick, this move is still too weak to confirm a sustainable return.

Smart Money does not expect Cardano to recover | Source: TradingViewThe RSI index — measuring the strength of buying or selling momentum — does not show bullish divergence. While the price of ADA has dropped to lower levels during the downturn, the RSI has also fallen to even lower levels, indicating that momentum has not yet reversed.

Downtrend — The downtrend line of ADA continues to form a descending triangle pattern on the daily chart. Without a bullish RSI divergence to counter this, the current structure indicates that the downside risk remains, making this bounce back potentially fragile unless buyers maintain a higher closing level.

Price Outlook for Cardano

Currently, the price of Cardano is trading around 0.62 USD. A daily close above 0.68 USD could pave the way for a short-term bounce back in the ADA price towards 0.76 USD and 0.89 USD. Conversely, if the price breaks below 0.61 USD, it could pull the price down lower, targeting the 0.55 USD level.

Mr. Teacher