In the latest crypto update, analyst Ali Martinez identified three warning signals suggesting that Cardano’s recent rally may be losing momentum.
Martinez’s Three Warning Signals
According to Martinez, the signals involve whale holdings, the Market Value to Realized Value (MVRV) ratio, and the Tom DeMark (TD) Sequential indicator. His warning comes less than two weeks after ADA embarked on a bullish run that propelled its price above $0.21.
Cardano Whale Holdings Decline
The first warning signal comes from Cardano’s large holders.
Martinez noted that the number of wallets holding between 1 million and 10 million ADA dropped from 2,370 on August 2 to 2,340. Although the decline amounts to just 30 wallets, it could prove significant because this group controls a substantial amount of ADA.
Notably, Martinez noted that the decline indicates that some large holders are taking profits after ADA’s recent advance or redistributing their holdings. Either scenario could increase selling pressure if the number of large holders continues to fall. Therefore, investors may watch this whale cohort closely for signs of further distribution.
ADA’s MVRV Ratio Flashes a Bearish Signal
The second warning signal revolves around Cardano’s MVRV ratio.
For context, MVRV compares an asset’s market value with its realized value and helps assess whether holders, on aggregate, are sitting on substantial unrealized gains or losses. Consequently, changes in the ratio can provide clues about shifts in market sentiment and profit-taking activity.
Martinez highlighted a death cross involving Cardano’s MVRV ratio and its seven-day simple moving average. In technical analysis, a death cross generally occurs when a shorter-term trend measure moves below a longer-term measure, indicating that momentum may be weakening.
As a result, the MVRV signal adds another layer of caution to ADA’s recent price performance.
TD Sequential Issues an ADA Sell Signal
Martinez’s third warning signal relates to the TD Sequential indicator.
This is a technical tool designed to identify potential points of trend exhaustion and possible reversals. On Cardano’s daily chart, Martinez’s indicator has now produced a sell signal.
Notably, the signal does not guarantee an immediate decline. Instead, it suggests that ADA’s recent upward move could be approaching a short-term exhaustion point. Martinez expects the signal could trigger a one-to-four-candlestick pullback. Alternatively, it could mark the beginning of a longer bearish countdown.
The accompanying chart also shows ADA facing rejection around the $0.202 area before retreating toward $0.188.
$0.170 Emerges as a Critical ADA Support
If these three warning signals translate into sustained selling pressure, Martinez identifies $0.170 as a key support level for ADA. The $0.170 region sits around the middle of the trading range highlighted in his analysis. Therefore, a decline toward this level would represent a meaningful retracement from ADA’s recent highs, but it would not necessarily invalidate the broader trading range.
However, the outlook would become considerably more bearish if ADA decisively loses $0.170.
A breakdown below this support could expose the lower boundary near $0.144, according to Martinez’s chart. Such a move would indicate that sellers have gained greater control over ADA’s short-term price action.
Evans Kelvin
