Cardano's ADA has faced difficulties in maintaining stability over the past month. Currently, it is trading at $0.70, down nearly 10% in the past 30 days.
This downward trend is occurring as the broader market is struggling, affecting investor sentiment and causing short-term holders (STHs) to significantly reduce their holding periods.
Cardano's short-term traders are selling rapidly—Will ADA find support?
STHs, or investors who typically hold assets for less than a month, have significantly reduced their ADA holding periods as negative sentiment spreads across the cryptocurrency market.
According to data from IntoTheBlock, these investors have reduced their holding periods by 12% over the past month, further exacerbating the coin's price decline.
Cardano Balance by Time Held. Source: IntoTheBlockWith their influence on short-term market trends, this decrease in activity among STHs suggests a lack of confidence in ADA's near-term recovery potential. If this selling wave continues, the coin may struggle to find solid support unless long-term investors or institutional investors intervene to absorb the selling pressure.
Additionally, ADA's funding rate on its Derivative market remains negative, confirming the negative sentiment towards it. According to Coinglass, the current rate is -0.006%.
Cardano Funding Rate. Source: CoinglassThe funding rate is a periodic fee exchanged between long and short traders in perpetual futures contracts. It is designed to keep the contract price aligned with the spot market.
When it is negative, short-term traders are paying long-term traders, indicating that negative sentiment is prevailing, with many traders betting on price declines.
ADA Faces Increasing Selling Pressure
The decline in ADA's price has pushed it below the 20-day Exponential Moving Average (EMA) on the daily chart. This indicator measures the asset's average price over the past 20 trading days, with a focus on recent price changes.
When an asset's price falls below this critical moving average, it signals a weakening of market momentum and suggests a short-term downtrend. Traders view this as a bearish signal, indicating increased selling pressure and the potential for further price declines.
If this continues, ADA's price could drop to $0.60.
ADA Price Analysis. Source: TradingViewOn the other hand, a strong recovery could trigger a breakout above the $0.72 resistance level and move towards $0.82.
