Cardano Price Forecast: ADA flashes sell signal as whales holding, on-chain volume declines

Cardano (ADA) edges lower by nearly 2% at press time on Wednesday, extending the declining trend for the third consecutive week. The technical outlook indicates a bearish bias, as ADA declines within a falling channel, aligning with on-chain signals of network slowdown and large-wallet investors' ADA holdings.

Network volume declines post-profit booking surge 

Cardano on-chain data indicates a decline in network activity following a profit-booking spree on July 25. According to Santiment, the Network Realized Profit/Loss recorded a massive spike of 143.63 million ADA, indicating investors booked profits. 

Since the booking, the transaction volume has dropped to nearly $744 million on Tuesday, down from $1.69 billion on July 25. As transaction volume encompasses all on-chain activity, a decline indicates a slowdown in the network. 

Cardano on-chain data. Source: Santiment

However, the low-volume user base has returned, with daily active addresses rising to nearly 31,000, exceeding the 28,248 addresses that were active on July 25.

Cardano whales fuel selling pressure 

Large-wallet Cardano investors have been trimming their holdings since the profit-booking spree. Investors with 1 million to 100 million ADA have offloaded their holdings to 18.51 billion ADA, from 18.9 billion ADA on July 24. The 390 million ADA supply drop fuels selling pressure on Cardano.

ADA supply distribution. Source: Santiment

It is worth noting that investors with over 100 million ADA have acquired an additional 450 million ADA, increasing their holdings to 5.36 billion ADA. However, the difference in the total holding of these large-wallet investor groups indicates a greater risk of sell-off pressure from investors with holdings of 1 million to 100 million ADA. 

Cardano eyes further losses in a falling channel pattern

Cardano reverses from an overhead resistance trendline of a falling channel pattern on the 4-hour chart (shared below). ADA edges lower for the second consecutive day as the declining 50-period EMA on the same chart nears the 200-period EMA, increasing the death cross chances. Sidelined investors could consider this a sell signal as the short-term decline undermines the longer-term trend. 

The declining trend targets the $0.6884 support level, last tested on Sunday, suggesting further losses. 

The Relative Strength Index (RSI) reads 40 on the 4-hour chart, indicating a decline in buying pressure and suggesting room for further downside movement before reaching the oversold zone. Furthermore, the Moving Average Convergence Divergence (MACD) line crosses below its signal line, indicating a bearish turnaround in trend momentum. 

ADA/USDT daily price chart.

Looking up, Cardano should surpass the 200-day EMA at $0.7417 near the overhead trendline, which would mark the falling channel breakout.