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Cardano ‘old timers’ are moving: Is an ADA dump coming?
Hopes of ADA’s short-term recovery may have been dashed after this recent switch.
- Some of ADA’s long-term holders are retiring from self-custody.
- ADA might drop below $0.49 in the short term.
After falling slightly on the 1st of February, AMBCrypto noticed that Cardano’s [ADA] 90-day Mean Coin Age (MCA) spiked again. At press time, the MCA was 46.01.
For the uninitiated, the MCA is a similar metric to the Coin Days Destroyed (CDD). However, unlike the CDD, the MCA focuses on the long-term holders’ position.
When the value of the Mean Coin Age is low, it means long-term holders of a token are accumulating and retiring the tokens to self-custody.
“Au revoir, ADA”
In this case, one can assume that the accumulation is not for the short term. It also means that the participants are confident in the long-term potential of the said cryptocurrency.
But high values of the MCA, like in ADA’s situation, suggest that old coins were moved. Typically, this spikes that the holders could be planning to change the tokens for other options or abruptly sell them.
Source: Santiment
At press time, ADA’s price was $0.49, representing a 6.72% decrease in the last seven days.
However, Cardano’s native token was not the only cryptocurrency experiencing such a decline. Others, including Solana [SOL]
and Binance Coin [BNB], also had similar performances.Meanwhile, AMBCrypto went on to check ADA’s Liquidation Levels. Liquidation Levels are estimated price levels where the capital and positions of leveraged traders could be wiped out.
Selling season has not stopped
As of this writing, HyblockCapital data showed that there was a magnetic zone around $0.52 to $0.54. This zone implies that there was a cluster of liquidity with higher position sizes around the area.
Here, traders with 25x, 50x, and 100x long positions could be liquidated or have the positions hit stop loss.
On the downside, shorts with targets as low as $0.47 might not be liquidated. But that would only be the case if the leveraged positions were not extreme.
Source: HyblockCapital
Furthermore, a look at the Cumulative Liquidation Levels Delta (CLLD) showed that the indicator has moved in the negative direction.
This suggested that mild buying pressure or ADA accumulation might help the token recover quickly. Hence, traders looking to open new shorts might already be late.
In terms of the Funding Rate, on-chain data showed that it was positive. If the Funding Rate was negative, it would have implied that the perp price was trading at a discount compared to the spot price.
Since the metric was positive, it suggested that the perp price changed hands at a premium compared to Cardano’s index value.
Source: Santiment
Realistic or not, here’s ADA’s market cap in SOL’s terms
When put side by side with the price action, this move is considered bearish. This was because many market players were not buying the ADA dip.
Also, a lot of traders were aggressive sellers, indicating that another decline could be close.
