Cardano could face downward correction as whale activity signals increasing selling pressure

Cardano, one of the largest Ethereum competitors, rallied alongside altcoins over the past week. ADA yielded double-digit gains for traders on Binance. A sudden spike in whale transactions could imply profit-taking by large wallet investors in Cardano.

Also read: Cardano price likely to extend gains with bullish on-chain metrics

Cardano whale activity notes massive spike this week

Between November 3 and 9, crypto intelligence tracker Santiment noted a large spike in whale wallet transactions, valued at $1 million and higher. As seen in the chart below, there were over 12,000 large volume transfers on the Cardano blockchain. This is a significant number when compared to transfers over the past three months. 

Whale transaction count and price

Rising whale activity is typically correlated with profit taking in the asset. Cardano is likely to shed its gains and experience volatility as large wallet investors offload their ADA holdings and book profits at the current price. There is a possibility of a correction in Cardano price, this is why traders need to tread cautiously, despite the asset’s recent gains.

Another on-chain metric, Net Realized Profit/Loss, noted significant spikes in net realized losses. This is typically a sign of an impending correction in the asset, based on historical data. ADA traders are realizing losses by shedding their Cardano holdings, meaning their average cost of acquiring the altcoin was higher than the current ADA price. This supports a bearish thesis for ADA and signals a likely decline in the asset.

Cardano Network Realized Loss and price

Cardano yielded double-digit gains for holders over the past week as risk assets like Bitcoin, Ethereum and cryptocurrencies rallied. There are bullish developments in the Cardano ecosystem that are likely to fuel the altcoin’s uptrend. ADA price could battle the selling pressure from whale activity if demand across exchanges absorbs excess supply. 

The smart contract blockchain made strides in its development with the recent launch of SanchoNet, a testnet for on-chain governance. This boosts Cardano’s governance journey and is likely to support ADA in its uptrend.