The Cardano price has bounced again, but the outcome looks familiar. Since January 20, ADA climbed roughly 7%, briefly pushing higher before stalling and settling near $0.35. This was not a breakout. It was another bounce that failed to build follow-through.
Three factors explain why Cardano’s price bounces keep failing, and why the same setup remains in place.
Reason 1: A Weak Hidden Bullish Divergence Sparked the Bounce
The latest bounce was triggered by a hidden bullish divergence on the 12-hour chart. Between late December and January 20, the ADA price made a higher low while the RSI printed a very shallow lower low.
SponsoredThat detail matters. A shallow RSI lower low suggests selling pressure eased slightly, not that buyers took control. This type of divergence usually leads to short-lived rebounds, not sustained rallies.
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That is exactly what happened. Cardano’s price bounced about 7% to $0.37 on January 21, but the move stalled quickly.
The timing explains why. On January 21, when the price approached $0.37, Cardano’s development activity score peaked near 6.94, its highest level in about a month.
Development activity reflects how much work is happening on the chain and often supports price confidence. In mid-January, the local ADA price peak closely followed a local peak in development activity.
That development-led support did not hold. Development activity slipped, taking the price down with it. It has now risen to around 6.85, but the month-high level hasn’t been broken. The divergence stopped the selloff, but it did not create enough demand to push higher as development stalled.
Sponsored SponsoredReason 2: Profit Booking Spikes Every Time the Cardano Price Rises
The bigger problem is what happens after Cardano starts moving up.
The spent coins age band tracks how many coins of all age groups are being moved. Rising values usually signal selling and profit booking. Over the past month, each price bounce has been followed by a sharp rise in spent coins activity.
In late December, Cardano’s price climbed by roughly 12%, while spent coins activity jumped by more than 80%, showing aggressive selling into strength. In mid-January, ADA rose about 10%, and spent coins activity surged by nearly 100%, again confirming that holders used the rally to exit positions.
The same behavior is returning now. Since January 24, spent coins activity has already increased by more than 11% from 105 million to 117 million, even though the ADA price has not broken higher yet. That suggests sellers are positioning ahead of another bounce rather than waiting for confirmation.
This is why momentum keeps fading. Each rally attempt is met with faster profit-taking than the last.
SponsoredReason 3: Whales Are Reducing Exposure, Not Absorbing the Selling
Normally, whales help absorb this type of selling pressure. Right now, they are not.
Wallets holding between 10 million and 100 million ADA have reduced their balance from roughly 13.64 billion ADA to about 13.62 billion ADA, a drop of around 20 million ADA since January 21. Starting January 22, wallets holding between 1 million and 10 million ADA have slipped from about 5.61 billion ADA to roughly 5.60 billion ADA, shedding close to 10 million ADA.
These are not panic exits, but they are clear net reductions. That lack of whale demand means profit-taking is no longer being absorbed, leaving the price more exposed to downside pressure once it arrives.
Derivatives data reinforces this weakness. Over the next seven days, short liquidations stand near $107.6 million, while long liquidations sit closer to $70.1 million. Shorts outweigh longs by more than 50%, showing that traders are expecting rallies to fail rather than extend.
This imbalance suggests the market expects selling pressure to return quickly if Cardano attempts another bounce, especially near resistance.
Cardano Price Levels That Decide What Happens Next
The price structure now makes things clearer.
On the upside, $0.37 remains the first critical level. A clean break and hold above it would trigger short liquidations and offer temporary relief. However, $0.39 is far more important. A move above this zone would liquidate most remaining shorts and mark the first meaningful shift in momentum. Beyond that, $0.42 is the level where the broader structure could be bullish again.
On the downside, $0.34 is the key support. A loss of this level would liquidate a large portion of remaining long positions and could accelerate downside pressure quickly as leverage unwinds.
For Cardano to escape this cycle, three things must align. Development activity needs to reclaim and hold above recent highs. Spent coins activity must slow instead of rising into bounces. And whales need to return as net buyers.
Until then, Cardano’s price bounces remain vulnerable.
