Yeliz Akmaca 
Cardano is attempting to stabilize after a difficult stretch, but the broader structure remains fragile. ADA has gained around 1.8% over the past 24 hours, yet it is still down nearly 9% on the week. More importantly, price continues to trade below key short-term trend levels, keeping downside pressure intact.
At first glance, the move resembles a standard bearish continuation. However, when participation, holder behavior, and derivatives positioning are examined together, the picture becomes far less straightforward. The sell-off appears driven more by disappearing spot interest than by panic liquidation.
Spot Participation Faded Before Price Did
The weakness began with activity rather than price. On January 6, Cardano’s decentralized exchange spot volume peaked near $1.49 million, coinciding with ADA’s highest price level of the year so far. From that point onward, both price and participation rolled over simultaneously.
By January 22, spot volume had fallen to roughly $68,000, marking a collapse of more than 95% in just over two weeks. Because this data reflects on-chain spot trades rather than leveraged positions, it points directly to retail traders stepping away from the market.
This drop in activity aligned closely with a technical shift. ADA slipped below its 20-day exponential moving average in mid-January. That level defines short-term trend direction, and in Cardano’s history, losing it has repeatedly triggered sharp corrective phases.
This time, spot demand failed to recover. With fewer organic buyers willing to step in, price slid more easily, opening the door for aggressive bearish positioning.
Whales Accumulated Into Visible Weakness
While retail participation faded, large holders moved in the opposite direction. Addresses holding more than one billion ADA began accumulating around January 14, even as price momentum remained negative. Their combined holdings rose by roughly one billion ADA during the correction, representing more than $350 million accumulated into weakness.
A second cohort followed shortly after. Wallets holding between 10 million and 100 million ADA added to their positions starting January 17, the same day ADA definitively lost its 20-day EMA. The timing is critical. These buyers did not chase strength. They stepped in after the trend broke and after spot interest collapsed.
That behavior suggests deliberate positioning during visible weakness rather than reactive momentum trading.
Derivatives Turned Heavily Bearish
As spot liquidity dried up, derivatives traders leaned aggressively to the short side. The loss of trend support and collapsing volume made the bearish narrative appear straightforward. As a result, short positions crowded into perpetual futures.
On Binance, ADA is now strongly short-biased, with short liquidation exposure roughly 2.5 times larger than long exposure. Total short leverage stands above $22 million. This imbalance matters because even modest buying pressure can force rapid position closures.
When spot traders leave and shorts pile in, price becomes increasingly sensitive to small shifts in demand.
Key Levels That Decide the Next Move
On the 12-hour chart, Cardano broke down from a head-and-shoulders structure around January 20, triggering the final wave of spot selling and encouraging additional short exposure. However, momentum no longer confirms continued downside.
The Money Flow Index has begun turning higher while price holds near recent lows. As MFI breaks its descending trend, it suggests dip buying rather than panic selling. That shift leaves short positions increasingly exposed if spot demand returns.
Short liquidation pressure begins near $0.37. A move above that level would start forcing closures, while strength above $0.39 could accelerate liquidations. A push toward $0.42 would place most near-term short exposure at risk.
The bearish scenario regains full control only if ADA breaks and holds below $0.34. Sustained trading under that level would invalidate the stabilization thesis and reopen downside risk toward prior lows.
Until then, Cardano remains caught between fading retail participation and growing whale conviction. Spot traders may have stepped aside, but positioning beneath the surface suggests the move is not finished yet.
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