Cardano price has fallen nearly 4% in the past 24 hours and remains about 33% lower over the past month. Despite this weakness, several technical and on-chain signals suggest that selling pressure is waning.
ADA supply as a percentage of profits has fallen by about 75% since January, sharply reducing the incentive to take profits. At the same time, a potential reversal pattern is forming on the lower timeframe. Taken together, these signals raise important questions. Is the Charles Hoskinson-led token bracing for a pullback to $0.34, or is this just another failed recovery attempt?
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Reverse patterns and divergences are hints for buyers to take back control.
On the 4-hour chart, Cardano is forming an inverted head-and-shoulders pattern. This structure often appears near local bottoms, indicating that sellers may be losing control. It consists of a left shoulder, a deeper middle low shoulder, and a higher right shoulder.
In this case, the neckline is sloping downward. A downward neckline makes a breakout difficult as buyers have to break through the downward resistance. For this pattern to take effect, ADA needs a 4-hour close clearly above the $0.275-$0.280 zone.
The Relative Strength Index (RSI), a momentum indicator, also supports this early recovery attempt. From January 31st to February 9th, Cardano seems to have made a price low, but the Relative Strength Index (RSI) has made a higher low. The development of this bullish divergence indicates that selling pressure is easing even as prices test new near-term lows.
The divergence signal checks if the next ADA price candlestick is above $0.259.
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Simply put, sellers are becoming less aggressive. Buyers are also gradually entering the market. But this mechanism only works if demand continues to rise. Without follow-through, these patterns usually fail. Therefore, all eyes will be on whether sellers still have strong reasons to exit.
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Profit taking and coin activity collapse, reducing selling pressure
On-chain data shows that sales incentives have decreased significantly over the past month.
Total ADA supply as a percentage of profits fell from more than 33% in mid-January to about 8% in early February. This corresponds to a reduction of approximately 75%. Profitable supply is near the lowest level in six months.
If very few holders are profiting, fewer investors will be willing to sell in response to a small pullback. Most companies are either breaking even or incurring losses. This reduces natural selling pressure.
Another supportive signal comes from spent coin age data. This tracks how many coins are being moved across old and young cohorts. During the decline on February 6th, the coin’s activity spiked to approximately 168 million ADA. Since then, it has fallen to about 92 million people. This is a decrease of approximately 45%.
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This shows that long-term holders are no longer in a hurry to move or sell their coins. Panic withdrawals slowed. Many investors are choosing to wait. When a decrease in profit supply coincides with a decrease in coin movement, it usually means circulation is being eased. This does not guarantee a rally, but it creates space for it to develop.
With fewer willing sellers, the next move largely depends on the stamina of the buyers.
Whether $0.34 works or not depends on volume and Cardano price level
Despite structural improvements and weakening selling pressure, buying power remains limited.
On-balance volume, which tracks whether volume supports rising or falling prices, is still trending lower. It remains below the downtrend line. This shows that the recent recovery is not supported by sustained demand.
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The last big buying surge occurred on February 6th, when ADA rose almost 30% in one day, from around $0.220 to around $0.285. Volume expanded rapidly during this move. Since then, participation has cooled.
For a true breakout to develop, volume needs to expand again and push OBV above the downtrend. Without it, the rally could falter. Major ADA price levels reflect this balance.
The first major resistance level is near $0.275. A confirmed break above this zone validates the reverse pattern. Beyond that, $0.285 becomes the next hurdle. Clearing both opens the way to $0.346, almost 30% off the neckline of the pattern.
On the downside, $0.259 is an important support. Falling below this level will weaken the right shoulder and can damage bullish setups. A complete invalidation occurs below $0.220, bringing the price back below the base of the pattern.
Simply put, Cardano is nearing a decision point. Sales incentives decreased by approximately 75%. Coin activity has cooled down. The momentum is getting better. However, the volume has not yet confirmed buyer control.
If strong participation returns and the price breaks above $0.275, a move toward $0.34 (or $0.346 to be exact) becomes realistic. Otherwise, the price of ADA risks falling again.
