Cardano (ADA) experienced a significant decline this week, falling roughly 27% and slipping below the key $0.66 support level amid risk-off flows impacting the broader crypto market. Bitcoin’s recent slide toward $104,000, coupled with softer altcoin liquidity, exacerbated the downside pressure. On-chain data further reveals that large ADA holders are adopting a defensive stance.
### Whale Activity Shows Mixed Signals
Santiment-tracked wallets holding between 1 and 10 million ADA have offloaded approximately 40 million ADA over the past seven days. More broadly, whale distribution reportedly reached around 350 million ADA, adding to downward pressure on the price. However, there is a contrasting dynamic as other significant wallets have accumulated between 140 and 200 million ADA. This split in whale activity is contributing to a choppy consolidation pattern, with ADA fluctuating between $0.65 and $0.70.
### Derivatives Market Adds to Caution
The derivatives market reflects a cautious tone as well. Cardano’s open interest dropped by 2.12% to $669.9 million. Notably, long liquidations totaling $1.13 million significantly outpaced short liquidations of $187,000, indicating that bulls have borne the brunt of the recent sell-off.
On the 4-hour chart, ADA is forming a falling wedge pattern, but confirmation requires a breakout above $0.74. Momentum indicators present a mixed picture: the RSI stands at 37, approaching oversold territory, while the Chaikin Money Flow (CMF) remains positive between 0.12 and 0.15. This suggests some returning spot inflows, though these have yet to overwhelm supply from large holders.
### Downside Risks and Potential Rebounds
Technicians emphasize a “risk-first” approach in the near term. Losing the $0.66 level puts $0.65 in play. A failure to hold $0.65 could open the path to $0.62-$0.60, and then down to $0.57, where channel and structural support converge. In the event of a broader crypto market weakness, an even deeper shakeout could test $0.53.
On the upside, ADA must reclaim $0.66 and subsequently clear the $0.74-$0.80 range, which aligns with the 50-day EMA cluster to signal a reversal in trend strength. Above this level, bulls may target $0.86, with a psychological retest of $1.00 possible into Q4 if risk appetite and capital flows improve.
Several analysts remain optimistic, eyeing a potential breakout toward the $1.20-$1.60 range. However, most caution that the market may experience further dips before a significant upward move, due to leverage resets and uneven liquidity conditions.
### Upcoming Catalysts and Market Outlook
Key factors to watch include the October 23 Grayscale ADA ETF decision window, overall stablecoin and ETF net flows, and whether whale selling pressure eases. Historically, a rotation back into altcoins tends to follow Bitcoin stabilization. Conversely, renewed weakness in Bitcoin would likely prolong ADA’s consolidation near current lows.
ADA’s daily chart trends downward for now, but development progress continues. New staking access options (such as eToro US) and ongoing initiatives like Midnight and Leios are broadening Cardano’s roadmap. However, total value locked (TVL) on Cardano remains modest at around $288 million, lagging larger chains.
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*Cover image generated by ChatGPT. ADAUSD chart via TradingView.*
https://www.newsbtc.com/news/cardano/analysts-caution-cardano-ada-may-drop-further-before-1-rebound-after-12-dip/