Data points to a concerning trend for the popular altcoin project Cardano‘s ADA. According to on-chain data, there has been a significant decrease in the number of small-scale wallet addresses holding ADA.
The Number of Small-Scale Wallet Addresses Holding Between 1-10 ADA Is Rapidly Decreasing
Since the middle of November this year, there has been a notable decline in small-scale wallet addresses created for Cardano’s ADA. The number of such wallet addresses holding between 1-10 ADA has decreased by 98.1% since then. This is a significant finding that historically signals capitulation, where investors give up and surrender, and could be a harbinger of a potential trend reversal for the price.
Despite this concerning development, ADA’s price has increased by over 65% since November. The price chart vividly illustrates the strong performance of the altcoin, making it one of the best-performing altcoins in the overall crypto market’s recent rally. However, the sharp decline in the number of small-scale wallet addresses could pose a problem for the developing rally.
A decrease in small-scale wallet addresses is often seen and interpreted as a serious warning sign. Typically, a reduction in the number of small-scale wallet addresses is taken to mean that small investors are beginning to lose faith in that asset. Mass exits from these investors are usually considered a harbinger of a severe sell-off and a notable decrease in buying pressure.
ADA May Fall Victim to Small Investors
In recent days, ADA’s price chart has predominantly shown an upward trend under high volatility. Notably, the green bullish candles burned in the last two weeks indicate strong buying interest. Nevertheless, small investors selling their ADA could spoil this positive atmosphere. According to market observers, if the exit of small investors continues, the fuel for ADA’s current rally will eventually run out, and the rising trend will give way to a downtrend.
On the other hand, as this article is being prepared, ADA’s price continues to show strength, contrasting with the critical on-chain data. The price of the altcoin has seen a decrease of 3.11% in the last 24 hours, trading at $0.5831. Although the decrease in small-scale wallet addresses could be an early warning sign for ADA’s price rally, it is still too early to make a final prediction at this point.
