Cardano price has risen again, but the outcome looks familiar. Since January 20, ADA has increased by about 7%, but stopped after a brief lift and stabilized near $0.35. This was not a breakthrough. It was yet another rise that failed to create further growth.
Three factors explain why Cardano's price increases continuously fail, and why the same picture still applies.
Reason 1: A weak hidden bullish divergence triggered the rise
The last rise was triggered by a hidden bullish divergence on the 12-hour chart. Between the end of December and January 20, ADA price created a higher low while the RSI showed a very weak lower low.
That detail is important. A weak RSI lower bottom suggests that selling pressure eased a bit, but buyers did not take control. This type of divergence usually leads to short-lived price increases, not sustained bull markets.
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That's exactly what happened. Cardano's price rose about 7% to $0.37 on January 21, but the rise quickly stalled.
The time aspect explains why. On January 21, when the price approached $0.37, Cardano's development activity score peaked near 6.94, the highest level in about a month.
Development activity reflects how much work is happening on the chain and often supports confidence in the price. In mid-January, the local ADA price peak closely followed a local peak in development activity.
This development-driven support did not hold. Development activity fell, and so did the price. It has now risen to around 6.85, but the month's peak level has not been broken. The divergence stopped the fall, but there was not enough demand to push the price further up as development stalled.
Reason 2: Profit booking increases every time Cardano's price rises.
The bigger problem is what happens after Cardano starts to rise.
The age band for used coins tracks how many coins from different age groups are moved. Increasing values usually signal selling and profit booking. In the last month, each price increase has been followed by a sharp increase in activity with used coins.
At the end of December, Cardano's price rose by around 12%, while activity with used coins increased by over 80%, indicating aggressive selling on strength. In mid-January, ADA increased by about 10%, and activity with used coins jumped nearly 100%, which again confirmed that holders used the rise to sell out.
The same behavior has returned now. Since January 24, activity with used coins has already increased by over 11% from 105 million to 117 million, even though ADA's price has not broken upwards yet. This suggests that sellers are positioning themselves ahead of another rise, instead of waiting for confirmation.
This is why the momentum is continuously decreasing. Every time the price attempts to rise, profit booking occurs faster than the previous time.
Reason 3: Whales are reducing exposure, not absorbing the selling.
Usually, whale wallets help absorb this selling pressure. Now they are not.
Wallets holding between 10 million and 100 million ADA have reduced their holdings from about 13.64 billion ADA to around 13.62 billion ADA, a drop of about 20 million ADA since January 21. As of January 22, wallets holding between 1 million and 10 million ADA have fallen from around 5.61 billion to about 5.60 billion ADA, disposing of nearly 10 million ADA.
This is not panic selling, but there are clear net reductions. The lack of whale demand means that profit booking is not being absorbed, making the price more vulnerable to downward pressure when it occurs.
Derivatives data reinforces this weakness. Over the next seven days, short liquidations are close to $107.6 million, while long liquidations are closer to $70.1 million. Short positions exceed long positions by over 50%, indicating that traders expect the rise to fail rather than continue.
This imbalance suggests that the market expects selling pressure to quickly return if Cardano attempts to rise, especially near resistance levels.
Cardano price levels that determine what happens next.
The price structure is now making the picture clearer.
On the upside, $0.37 is the first important level. A clear break above and stabilization above this will trigger short liquidations and provide temporary relief. But $0.39 is far more important. A break up here will liquidate most remaining short positions and mark the first significant shift in momentum. Above this, $0.42 is the level where the overall structure could become bullish again.
On the downside, $0.34 is the critical support level. A loss of this level will lead to the liquidation of a large portion of the remaining long positions and could quickly increase downward pressure as the gearing decreases.
For Cardano to break out of this cycle, three factors must align. Development activity must regain and hold above recent peak levels. Activity for used coins must decline instead of increasing when prices rise. Additionally, whale wallets must return as net buyers.
Until then, Cardano's price creations remain vulnerable.
