ADA is up 2.21%, but things are not looking good. ADA’s woes are rooted in the balance of holdings and price action. Despite the recent release of the exciting Ouroboros Leios upgrade, the Cardano [ADA] ecosystem continues to face challenges while other cryptocurrencies are recovering.
Cardano’s price has increased by 2.21% in the past 24 hours and was trading at $0.3558 at press time. This price action comes after the announcement of the Ouroboros Leios upgrade, which is designed to increase Cardano’s speed to over 1,500 transactions per second (TPS).
Additionally, Cardano completed the first hard fork of the Voltaire era, introducing community-based governance and on-chain voting. As the Cardano Governance Workshop prepares for the V2.1 update, the network continues to grow, reaching a total transaction volume of 96 million. Despite these positive developments, many of ADA's key indicators remain negative.
Holding reduces balance
One of the worrying indicators is the decline in U.S. dollar holdings. The percentage change in holding balances has always been in deficit territory, and this month is no exception. Holdings of small traders holding Cardano worth less than $1 edged up 0.23%, but holdings in other categories fell significantly. Large investors holding more than $1 million worth of ADA collectively fell as much as 18%.
This suggests that whales, who play an important role in any cryptocurrency market, are exiting ADA, which could be a sign of more trouble to come.
Can ADA break out of the symmetrical triangle?
Although things seem grim for Cardano, there are some signs of optimism. ADA’s price action within a symmetrical triangle pattern suggests that a potential breakout may be around the corner.
The ADA/USDT pair has been in a consolidation phase since August 5, with both the upper and lower trendlines refusing to break out three times. However, as of press time, today’s upper trendline rejection may finally be broken given the upward momentum across the cryptocurrency market.
If ADA manages to break out to the upside and the breakout is confirmed with a retest, it could follow the positive trend of other cryptocurrencies.
On the other hand, if ADA breaks out and forms lower highs and lower lows, it may continue to fall as the RSI divergence indicator remains bearish for ADA.
Positive financing rates bring hope
Another encouraging aspect for ADA is the OI-weighted financing rate, which is currently positive at 0.0097%. This shows that traders are paying fees to maintain long positions, indicating that long-term holders are confident in ADA’s potential for future price increases.
However, for ADA to achieve a full price reversal, other factors must be present, such as continued increases in ADA trading volume and broader cryptocurrency market support. If these conditions are met, Cardano could see a positive price trend driven by favorable funding rates and an overall market recovery.
Although Cardano has faced significant recent challenges, including declining whale holdings and difficulty breaking out of key price patterns, there are still some factors that could push ADA higher. Positive funding rates, potential breakout, and market recovery could help ADA regain momentum and see a more bullish price outlook.
