Why Big Investors Are Buying Cardano (ADA) on the Dip
When the price of Cardano (ADA) dropped over 20% recently, the first reaction for many retail investors was panic. However, the latest data reveals that institutional players and major holders—or whales—saw this dip as a golden opportunity. In this article, we’ll uncover the data and technical insights that explain why big money flooded back into ADA, signaling possible bullish momentum ahead.
Cardano Whale Activity: A Key Bullish Signal
Between January 14 and January 25, Cardano’s ADA hit new local lows, trading near $0.35. While smaller retail wallets opted to reduce their positions, large entities holding between 10 million to 100 million ADA started buying heavily. Wallet data shows that their accumulations increased significantly, adding over $10 million worth of ADA during the dip. Similarly, mid-tier wallets holding 1 million to 10 million ADA also resumed buying once prices stabilized, adding approximately $3.5 million in holdings.
This contrast highlights a common pattern: retail investors often sell during market fear, while institutional players seize discounted opportunities. If you’re looking to follow the smart money, these behaviors suggest ADA’s current levels may be undervalued.
Technical Indicators: What the Charts Say
Beyond wallet behavior, technical indicators provide further insights into ADA’s potential price recovery. Two critical metrics—the Relative Strength Index (RSI) and the Money Flow Index (MFI)—indicate growing bullish momentum.
- Relative Strength Index (RSI): Despite ADA making a lower low on January 25, the RSI showed a higher low, signaling a bullish divergence. Such patterns often precede price reversals, indicating that sellers are losing control.
- Money Flow Index (MFI): While prices fell, MFI data suggested that money was flowing into ADA. This underscores that large investors were actively buying during the dip, bolstering the case for a price rebound.
Key Price Levels to Watch
ADA’s current price action hovers around $0.35, with several critical price zones to monitor. A break above the 20-day exponential moving average (EMA) around $0.37 could shift momentum in favor of buyers. Historically, ADA’s price surged over 17% the last time it closed above this EMA. If bulls reclaim this level, resistance at $0.39 to $0.40 would be the next hurdle, followed by $0.427 and $0.484 in stronger rallies.
On the downside, risks remain. A daily close below $0.339 would weaken the recovery narrative, while a dip under $0.332 could invalidate the current bullish divergence.
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Conclusion: Smart Money Bets on Cardano
The recent 20% price drop in Cardano (ADA) triggered an influx of buying activity from large-scale players. Coupled with optimistic technical indicators like RSI and MFI, the stage is set for potential reversals if bullish sentiment gains traction. Whether you’re a seasoned investor or just starting, keeping an eye on ADA’s key levels and following wallet trends can provide guidance in navigating its price movements.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult with a professional before making investment decisions.
