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Cardano whales buy the dip – Analyzing impact on ADA’s price action
The cryptocurrency market has witnessed a significant surge in recent times, with Cardano [ADA] being no exception. However, this upward trajectory has been met with a sudden downturn, with ADA dropping by 8.82% over the past day. Despite this setback, it appears that some savvy investors are taking advantage of the dip to buy-in and potentially reap substantial gains.
As per recent reports, Cardano whales have purchased an astonishing 10 million tokens in just the span of 24 hours. This massive influx of buying activity has sparked curiosity regarding its potential impact on ADA’s price action.
The first point worth noting is that the market has not turned bearish in spite of this decline. Investors remain optimistic about ADA’s prospects, and there are several key indicators that suggest a recovery may be imminent.
One such indicator is the rising scarcity of ADA tokens. This phenomenon is reflected in the Stock to Flow Ratio (SFR), which has spiked to 291.37. It is well established that an increase in this metric generally precedes a price increase, as it signals the accumulation and storage of tokens off exchanges by buyers.
Furthermore, sentiment among traders on Binance is resoundingly bullish, with a positive funding rate signaling a mass exodus from short positions and a preference for long positions. This phenomenon has been observed throughout various markets and typically heralds a change in market momentum.
The DyDx Exchange funding rate shares this sentiment, with investors willing to pay premium fees to maintain their long positions. The fact that these metrics are converging suggests an overwhelming consensus among traders regarding the potential upside of ADA.
Lastly, Cardano’s MVRV Ratio has dipped below 1 at 0.92. Historically, instances where this metric drops have resulted in a buying opportunity and subsequent price reversal. Under such conditions, it is likely that ADA will reclaim $1.11 or even $1.15 if the dip continues.
In light of these data points, it can be inferred that Cardano whales purchasing 10 million tokens at this juncture may not necessarily signal a reversal in momentum. However, they do suggest that sentiment remains overwhelmingly positive and investors are taking advantage of the present discount to get-in on ADA’s expected recovery.
It is plausible that the aforementioned buying activity could lead to a stabilization or even a slight upswing before resuming its upward trajectory.
Source: ambcrypto.com
