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Despite Cardano’s massive whale buildup, ADA, its own currency, remains bearish, raising questions about the strength of the fundamentals and whether the upside phase is over in the first quarter of 2023.
ADA volatility has been declining in recent weeks despite many positive developments, mostly from on-chain data.
For example, the coin is down about 20% from its April highs and retested the local support zone around $0.38.
Cardano Price May 6 | Source: ADAUSDT on Binance, TradingView
Whales double, activity rises in Cardano
However, even in these market conditions, there are signs that ADA whales are accumulating in the ecosystem. While the reason for the swarm is unclear, according to IntoTheBlock, there have been over $100,000 worth of large transactions worth about $10 billion in the past 24 hours. A massive sale of this size last week was $20 billion.
Moreover, the data also shows that “large holders” control 35% of the total ADA supply. These organizations act as spokespersons for whales’ institutional players and activities, showing how they can invest and position.
While it’s not clear what knowledge Cardano’s whales have, their actions suggest they’re buying into failure. This is with ADA still below its 2021 peaks by about 87%.
Aside from wholesale whale purchases, the Cardano ecosystem is showing promising signs, with the blockchain remaining one of the most developed and used.
According to Santiment, 2.15 billion transactions have been processed on Cardano. As a rule, active networks, both in development and in use, indicate quality and trust. The more projects and addresses, the higher the chances that the platform coin will find support.
The surge in activity over the past few months, even with a general lull in the market, may be due to the launch of various non-fungible token (NFT) and decentralized finance (DeFi) projects. The algorithmic stablecoin Djed is already live on the mainnet. DeFi and NFT projects aim to use the EUTXO Cardano model. This system mirrors how Bitcoin functions, but adds a layer of smart contracts, just like Ethereum.
However, one of Cardano’s major events in recent days is the release of the first Hydra Head on the mainnet. This layer 2 scaling solution uses state channels, which extend the concept of payment channels. This technology could drive growth, possibly supporting ADA prices in the long run.
ADA remains optimistic
Even with the recent cuts, Cardano’s long-term outlook looks good. Currently the whales seem to be piling up adding over 150 million ADA in just one month.
As the big players are bullish on the coin, doubling down on dips, ADA prices could bounce back. In the medium term, the ceiling remains at $0.46, which is the April 2023 high.
