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Cardano‘s ADA price experienced a notable decline today, witnessing a 7.75% fall in the last 24 hours. However, ADA found significant support after retreating to the EMA 7 level of $0.5385 on December 13th, then rose to $0.6095 at the time of writing. We are examining together the factors of volatility recently observed in the Cardano price.
Why Is ADA Declining?
Technically, the price drop in ADA today attracted attention as part of a correction cycle that began on October 9th when ADA’s price reached $0.64, its highest level in 18 months. After the Relative Strength Index (RSI) on Cardano’s short-term charts exceeded 70, moving into the overbought territory, investors preferred to take profits.
An RSI value above 70 indicates that the traded asset is overvalued and suggests that the trend may reverse or a corrective pullback could occur. ADA experienced a correctional pullback, confirmed by its movement within a triangular structure on the four-hour chart, bound by support and resistance lines. This period demonstrates the market’s indecision, with neither buyers nor sellers in control.
Whales Begin Taking Profits
The volatility spike in Cardano on December 13th coincided with a modest decrease in the supply of ADA held by addresses with balances of over 1 million tokens. Notably, the whale community’s control over ADA’s supply increased from 21.62 billion to 21.66 billion tokens in December.
This increase coinciding with a 50% price surge of Cardano during the same period suggests that these whales have influenced ADA’s short-term price trends, with December 13th being no exception.
ADA Chart Analysis
The flag pattern observed on Cardano’s four-hour chart also indicates a potential continuation of an uptrend. Specifically, bull flags are known as triangular-like formations that occur during an uptrend. In summary, if ADA’s price breaks the bull flag upwards, it is well-positioned for a potential increase to $0.81 or approximately a 40% rise within the next two weeks by the end of the year.
Moreover, ADA’s proximity to the 50-4H exponential moving average (red line) near $0.528 also increases the recovery potential towards $0.81. Conversely, in a bearish scenario, a decisive break below $0.528 could lead to pushing the price towards the 200-4H EMA (green line) near $0.42.
