Can Cardano whales stop ADA price from falling 20%?

ADA price

The number of Cardano's richest investors holding ADA has surged to its highest level in almost a year.

The price of Cardano (ADA) risks falling by over 20% in August as it enters a breakdown stage of a classic technical pattern that could be offset by some promising fundamentals.

ADA price risks falling to June lows

Dubbed Bump-and-Run-Reversal (BARR), the pattern develops when excessive speculation drives the prices higher quickly, eventually leading to a "bull trap" situation. As it forms, the price trend undergoes three stages — Lead-in, Bump, and Run — as shown below.

*Bump-and-Run-Reversal illustration. Source: Warrior Trading*

The Lead-in stage sees the price trending upward in an orderly fashion — without any excess speculation. But the Bump stage witnesses a sharp advance in prices, followed by a complete wipeout of the spike.

In the Run stage, the price breaks below the support from the Lead-in trendline. Currently, Cardano appears to have entered the Run phase of its BARR pattern, as shown below.

*ADA/USD daily price chart. Source: TradingView*

If the pattern is confirmed, BARR's downside target is measured after subtracting the breakdown point at the support line from the pattern's maximum height. That brings ADA's price target near $0.22 in August or early September, down 20% from current levels.

Conversely, an ADA rebound can reach the 50-day exponential moving average (50-day EMA; the red wave in the chart below) near $0.30 in August, up 5% from the current prices.

Furthermore, flipping the wave into support could see a further run-up toward the 200-day EMA (the blue wave) near $0.34, up around 30% from current price levels.

Whales and sharks buy ADA price dips

On-chain fundamentals, however, could offset the bearish risks for Cardano.

Notably, whale and shark wallets holding between 100,000 and 1 million ADA have accumulated $116.1 million worth of Cardano since May 2023, raising their net holdings to the highest levels since September 2022.

*Cardano whales and shark accumulation in recent months. Source: Santiment*

This period of Cardano accumulation coincides with its 25% price decline caused by regulatory fears in the United States.

Simply put, ADA whales and sharks have bought the price dip, and are betting on future gains.

Cardano TVL, dapp transactions grow

Additionally, the ADA accumulation period happened alongside growth in Cardano's key network metrics in the second quarter. Namely, the total-value-locked (TVL) grew 9.7% quarter-on-quarter (QoQ), while average daily dapp transactions jumped 49% QoQ.

*Cardano TVL denominated in the U.S. dollar and ADA. Source: Messari*

Stablecoins fueled this TVL and dapp transactions, growing 34.9% QoQ — from $10.0 million in Q1 to $13.5 million in Q2. This growth in network activity should add to the upward pressure for ADA, which serves as a fee settlement and staking token in the Cardano ecosystem.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Cardano chart painting a bull flag for ADA price ahead of ERC-20 converter launch

ADAUSD

A classic technical pattern points to a 20% price rally in the Cardano market, with its profit target sitting above $3.

Cardano (ADA) appears to be heading toward a new record high as its downside move takes the shape of a bull flag.

In detail, the ADA/USD exchange rate plunged 16.91% to $2.47, but the pair’s decline came after a strong move higher, wherein it surged over 120% month-to-date to reach an all-time high of $2.97 on Monday. Therefore, the latest declines have given the impression that Cardano is undergoing a brief pause before it resumes its uptrend.

Part of the upside analogy stems from the downward sloping channel itself — two parallel trendlines enveloping the price moves. In addition, the consolidation accompanies falling volumes, indicating a weaker response from traders to pursue the downtrend.

As a result, the shape appears like a bull flag, as shown in the chart below.

*Cardano 4H price chart featuring bull flag setup. Source: TradingView*

Typically, bull flags prompt traders to enter the market at the pattern’s bottom or breakout above the upper trendline’s high. In doing so, traders target levels located at a distance equal to the size of the flag pole — i.e., the height of the uptrend that preceded the bull flag formation.

Cardano’s flagpole is $0.58-long. As a result, ADA/USD’s bull flag target is $3.05 if measured from the pattern’s bottom at $2.47, about 23.65% higher.

More bullish cues come from the 50-4H exponential moving average (50-4H EMA; the velvet wave). Traders have shown their intention to hold 50-4H EMA as interim support, somewhat validating a breakout move for ADA/USD if it manages to float above the wave.

The 50-4H EMA has been acting as a market entry level since July 21, 2021.

Additional support confluence for ADA/USD comes from the ascending channel’s lower trendline shown in the chart below. The pattern points toward a major price rebound, with a profit target at its upper trendline.

*Cardano price chart featuring ascending channel pattern. Source: TradingView*

In doing so, it could have ADA achieve its bull flag target midway.

Supportive fundamentals

The bullish technical setups emerged majorly due to euphoria surrounding Cardano’s long-awaited smart contracts feature, set to go live on Sept. 12 via the Alonzo upgrade.

The news boosted hopes that Cardano would be able to rival Ethereum, the biggest smart contracts platform, which has lately struggled with network congestion and higher transaction fees. As a result, demand for Cardano’s native asset, ADA, has been steadily growing.

Do you believe #Cardano will flip #Ethereum after 2.0 is fully operational?
— Crypto Daily (@Crypto_Daily) August 22, 2021

In the latest Cardano 360 event, its top executives announced further plans to attract Ethereum blockchain users. Francisco Landino, project manager at IOHK — the research and development arm behind Cardano — said Cardano would launch the testnet of an ERC-20 migration tool next week.

As a result, users will be able to transfer their Ethereum standard tokens (ERC-20) to Cardano’s native blockchain. SingularityNET, a decentralized artificial intelligence network, will migrate its native token, AGIX, from Ethereum to Cardano.

During the event, Cardano founder Charles Hoskinson also said that over 100 companies have been planning to move to Cardano in the coming months.

The upside outlook also came amid concerns over Cardano’s efforts to gain legitimacy from financial regulators despite championing itself as a “decentralized public blockchain.”

Namely, the Cardano Foundation has partnered with Confirm, a blockchain analytics firm, to boost its compliance efforts to fall in line with the Financial Action Task Force’s guidelines. Nevertheless, Weiss Crypto Ratings, a rating agency for cryptocurrencies, warned that Cardano’s decision would make its network “censorship-prone, politicized, and manipulated.”

4/ The whole point is to build a new financial and economic layer, free from the control and repression of those who have brought our world economy to the brink of total failure, able to be sustained only by excessive and aggressive centrally planned intervention.
— Weiss Crypto (@WeissCrypto) August 25, 2021

Hoskinson responded in a video message that Cardano’s partnership with Confirm provides clarity to businesses, thereby enabling “more adoption in all industries,” whether regulated or unregulated.

The ADA/USD exchange rate was $2.61 at the time of writing, up over 6.5% from its sessional low.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Cardano Price Prediction