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Cardano has seen a significant surge of over 10%, breaking through a crucial resistance level and now testing higher prices. Despite the bullish momentum, data from on-chain transactions indicates that long-term holders are starting to cash in on their profits. The ratio of daily on-chain transactions resulting in profit to loss has turned positive, suggesting that many investors are taking advantage of the recent price gains.
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As the market continues to evolve, ADA is striving to maintain its upward trend, fueled by positive sentiment and growing optimism for further price recovery. However, the trend of profit-taking suggests that some investors are carefully securing their gains, potentially leading to short-term price fluctuations.
With high expectations for a sustained rally in the upcoming weeks, investors are closely monitoring ADA’s performance to see if it can sustain its momentum. The next few days will be crucial in confirming whether Cardano can maintain its position above these levels and aim for new highs.
Selling by Long-Term Holders of Cardano
Following a significant surge, Cardano is currently testing local supply levels, with investors adopting a cautious approach in their short-term strategies.
Yesterday, the ratio of daily on-chain transactions in profit to loss reached 1.53, indicating that for every ADA transaction resulting in a loss, 1.53 transactions have generated profits. This data suggests that many investors are capitalizing on the recent price surge, leading to some long-term holders selling their coins for profit.
Data from Santiment further supports this observation, showing a slight decrease in Cardano’s Mean Coin Age and Mean Dollar Invested Age on September 11. These metrics track the behavior of long-term holders, reflecting the average age of ADA coins and the amount invested over time. A decline in these metrics indicates that holders who bought ADA at lower prices are now cashing in profits, thereby reducing the average age of the coins in their possession.
Despite the selling pressure, ADA still has the potential to sustain its bullish momentum if market conditions continue to be favorable. Cardano may aim for higher prices, but the cautious approach of experienced investors indicates that the rally could encounter resistance in the near future.
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The upcoming days are critical for ADA as it needs to maintain its current levels to confirm a continued upward trend. If buyers regain control and demand rises, Cardano could break through key resistance levels and target new highs.
Details of ADA Price Action
ADA is trading at $0.3565 after testing a significant resistance at $0.36. The price has closed above the 4-hour 200 exponential moving average (EMA) at $0.3490.
This is a crucial indicator of short-term strength that ADA had previously respected as resistance since early August. Successfully reclaiming the 4H 200 EMA is vital for maintaining the upward trend.
If ADA manages to retest this EMA and holds it as support, it would confirm a short-term bullish trend. Breaking and maintaining above this level indicates that ADA could continue its upward trajectory. Investors and analysts are eyeing the next target in the range of $0.38 to $0.40.
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However, if ADA loses this support level, the price could retreat to lower demand zones, potentially dropping to around $0.33. This would signal a weakening of the current momentum and potentially trigger further selling pressure.
Featured image from Dall-E, chart from TradingView