Cardano (ADA) has experienced a minor decline within a consolidation range, forming part of a larger descending channel pattern.
On-chain data reveals that large-scale investors, often referred to as whales, have acquired over 490 million ADA, while smaller retail investors have been selling throughout 2025.
Derivatives data indicates a slight increase in open interest, countering a rise in long liquidations.
Current Market Performance
Cardano saw a 1% drop in Tuesday's trading, extending Monday's 0.88% decline and maintaining a sideways trend within its seven-day price range. While this pullback has impacted retail investors, whale entities have significantly increased their exposure by scooping up nearly half a billion ADA tokens. Both technical and derivatives metrics reflect subdued optimism during this period of consolidation for Cardano.
On-Chain Data: A Divergence in Investor Behavior
Data from Santiment's ADA Supply Distribution highlights a clear divergence between large and small investors. Addresses holding over 1 million ADA tokens have increased their collective balance to 23.74 billion ADA, up from 23.25 billion since January 4th.
In contrast, addresses holding fewer than 100,000 ADA tokens have seen their collective holdings decrease to 6.72 billion ADA, down from 6.86 billion.
This split in holding trends coincides with Cardano's price retracement. As retail investors close positions to avoid losses in their lower-capital portfolios, what is often termed "smart money" is using the dip as a buying opportunity.
Derivatives Market Sentiment Holds Steady
Data from Coinglass shows that Open Interest (OI) has increased marginally by 0.68% to $769.92 million. A gradually rising OI is typically associated with increased buying activity in the derivatives market.
Adding to the building buy-side confidence, the OI-weighted funding rate has increased to 0.0074%, a mechanism used to keep perpetual swap prices aligned with the spot price. A positive funding rate is paid by longs to shorts, offsetting the price increase in swaps caused by leveraged long exposure.
However, liquidation data provides a counterpoint, showing an increase in the forced closure of long positions. Over the last 24 hours, long liquidations totaled $949.98 thousand, while short liquidations were less than half that amount at $333.06 thousand.
Amid this wash-out of long traders, the long/short ratio has dropped to 0.9704, indicating there are now slightly more active short positions than longs.
Technical Analysis: Consolidation Before a Breakout
Cardano's 1% decline on Tuesday followed a bearish doji candlestick pattern that resulted in a 0.88% loss on Monday. Despite the pullback, ADA remains trapped in a sideways trend between Tuesday's high of $0.5939 and Friday's low of $0.5450.
The larger pattern at play is a descending channel, formed by a pair of parallel descending trendlines. The upper line connects the highs from May 23rd and June 10th, while the lower line connects the lows from May 19th, June 5th, and June 23rd.
With the short-term decline approaching the $0.5450 support level, a daily close below this point could trigger a test of June's low of $0.5100, which sits just above the channel's lower boundary.
The Moving Average Convergence Divergence (MACD) indicator triggered a buy signal on Sunday, marked by a surge in green histogram bars. This bullish signal is supported by the MACD line crossing above its signal line.
Nonetheless, the Relative Strength Index (RSI) is at 37, floating just above oversold territory, suggesting that momentum still carries a bearish bias.
To reinforce an upward trend, Cardano must achieve a daily close above the upper trendline, which currently aligns with Tuesday's high of $0.5939. A breakout above this level could potentially target a move toward $0.6186, a level last tested on June 14th. For those tracking these developments in real-time, 👉 explore more advanced charting strategies can provide deeper insight.
Frequently Asked Questions
What is a descending channel pattern?
A descending channel is a bearish chart pattern formed by two downward-sloping, parallel trendlines. Price typically oscillates between these lines, with breaks above the upper line signaling a potential bullish reversal and breaks below the lower line indicating a continuation of the downtrend.
Why are Cardano whales buying while retail sells?
Whales, or large investors, often have a longer-term investment horizon and greater capital reserves. They may view short-term price dips as accumulation opportunities, whereas retail investors might be more prone to panic selling during downturns to avoid further losses on smaller portfolios.
What does Open Interest tell us about the market?
Open Interest (OI) represents the total number of outstanding derivative contracts, such as futures or options, that have not been settled. An increasing OI generally suggests new money is flowing into the market and can indicate strengthening sentiment for the current price trend.
How does the funding rate affect perpetual swaps?
The funding rate is a periodic payment exchanged between long and short traders to tether the price of a perpetual swap contract to the underlying spot price. A positive rate means longs pay shorts, often encouraging short positioning, while a negative rate means shorts pay longs, encouraging long positioning.
What is the significance of the MACD buy signal?
The MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator. A buy signal occurs when the MACD line crosses above its signal line, suggesting that recent short-term momentum is turning bullish and that an upward price move could be beginning.
What key level should ADA break for a confirmed bullish reversal?
For a confirmed shift in short-term momentum, traders are watching for a decisive daily close above the upper trendline of the descending channel, situated near $0.594. A break above this resistance could open the path toward higher resistance levels. To stay ahead of these market movements, 👉 get real-time analysis tools is a valuable next step.