Cardano price has rebounded again, and the results seem familiar. Since January 20th, ADA has risen about 7%, briefly rising before stalling and settling around $0.35. This was not a breakout. This was another bounce that he couldn’t build a follow-through on.
There are three factors that explain why Cardano price bounces keep failing and why the settings remain the same.
Reason 1: Weak hidden bullish divergence caused the pullback
The latest pullback was caused by a hidden bullish divergence on the 12-hour chart. From late December to January 20th, the ADA price hit new lows, but the RSI hit very shallow lows.
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The details are important. The shallow RSI low suggests that selling pressure has eased a bit, rather than buyers taking the lead. This type of divergence usually leads to a short-term rebound rather than a sustained rally.
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That’s exactly what happened. Cardano price rose about 7% to $0.37 on January 21st, but the move quickly stalled.
The reason can be explained by timing. On January 21st, as the price approached $0.37, Cardano’s development activity score peaked at around 6.94, its highest level in nearly a month.
Development activity reflects how much work is being done on the chain and often supports price confidence. In mid-January, the peak in local ADA prices roughly followed the local peak in development activity.
Development-led support was not maintained. Development activity stalled and prices fell accordingly. Currently, it has risen to around 6.85, but the monthly high level has not been broken. This discrepancy halted the decline, but the stagnation in development did not create enough demand for an increase.
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Reason 2: Profit bookings spike every time Cardano price increases
The bigger question is what will happen once Cardano starts rising.
Spent Coin Age Bands tracks how many coins of all age groups have been moved. A rise in value usually indicates selling and profit taking. Over the past month, spending coin activity has increased sharply every time the price has jumped.
In late December, Cardano price rose by around 12% and spent coin activity surged over 80%, indicating an aggressive sell-off to strength. In mid-January, ADA rose by around 10% and spent coin activity spiked by almost 100%, once again confirming that holders took advantage of the rally to unwind their positions.
Now the same behavior is back. Since January 24th, spent coin activity has already increased by more than 11% from 105 million to 117 million, even though the ADA price has not yet increased. This suggests that sellers are positioning ahead of the next pullback rather than waiting for confirmation.
This is why momentum continues to decline. Each attempt to move higher results in faster profit-taking than the last time.
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Reason 3: Whales are not absorbing selling and are reducing their exposure.
Usually, whales help absorb this type of selling pressure. That is not the case at this time.
The balance of wallets holding between 10 million and 100 million ADA decreased from approximately 13.64 billion ADA to approximately 13.62 billion ADA, a decrease of approximately 20 million ADA since January 21st. Since January 22nd, the balance of wallets holding between 1 million and 10 million ADA has decreased from approximately 5.61 billion ADA to approximately 5.6 billion ADA, a decrease of nearly 10 million ADA.
These are not panic exits, but clear net cuts. A lack of demand from whales means profit-taking can no longer be absorbed, leaving prices under downward pressure.
Derivative data strengthens this weakness. Over the next seven days, short-term liquidations remain near $107.6 million and long-term liquidations remain near $70.1 million. Shorts outnumbered longs by more than 50%, indicating that traders expect the rally to fail rather than be prolonged.
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This imbalance suggests that the market expects selling pressure to return soon if Cardano attempts a further rally, especially near resistance.
Cardano price levels that will determine what happens next
The pricing structure has made the situation more clear.
On the upside, $0.37 remains the first significant level. A clean break and above would trigger a short liquidation and provide temporary relief. However, $0.39 is much more important. Above this zone, most of the remaining shorts are liquidated and marks the first meaningful change in momentum. Above that, $0.42 is a level where the broader structure could become bullish again.
On the downside, the main support is $0.34. Losing this level could liquidate a large portion of remaining long positions, rapidly accelerating downward pressure as leverage loosens.
For Cardano to break out of this cycle, three things need to align. Development activity should pick up and sustain recent highs. Spent coin activity should slow down instead of increasing bounce. And the whales need to come back as buyers.
Until then, Cardano’s price bounce remains vulnerable.
