Cardano (ADA) has been gaining attention in the cryptocurrency market recently, especially after an asset manager filed for a Cardano Exchange-Traded Fund (ETF) in the United States. This development has led to increased interest from traders and investors, resulting in a notable price surge. However, as ADA approaches crucial resistance levels, the rally seems to be cooling off, leaving market participants wondering whether this is a temporary pullback or a shift in market sentiment.

Cardano (ADA) Losing Its Gain

Cardano’s price surged significantly in recent days, but as it approached key resistance levels, it began to experience substantial sell-offs. At the time of writing, ADA is trading around $0.77, with a slight drop after reaching an intraday high of $0.815. While the asset has experienced an 11% gain in the past 24 hours, the momentum slowed as profit-taking and market uncertainty crept in.

Despite the dip, ADA has managed to maintain its uptrend, staying above the 200 Exponential Moving Average (EMA) on the daily time frame, a key technical indicator for trend confirmation. This signals that, despite the price pullback, the long-term outlook for Cardano remains relatively strong. More importantly, long-term holders seem unfazed by the short-term volatility, continuing to accumulate the token despite the sell-offs.

Current Price Momentum

At its peak, ADA surged by as much as 16% before retracing some of its gains. The asset is now encountering resistance at the $0.85 level, which has proven challenging for ADA to break above. If ADA manages to close a daily candle above this price point, technical analysts predict that it could push higher, potentially reaching the $1.13 level, marking a 32% increase from its current price.

This price action suggests that ADA’s short-term direction could be heavily influenced by its ability to overcome this resistance zone. A successful break above $0.85 would likely signal that the rally is far from over, potentially attracting more investors into the market.

Major Liquidation Areas

Traders seem to be taking a mixed approach to ADA, with some betting on its short-term declines and others holding long positions in anticipation of future gains. The major liquidation areas on the charts are currently at $0.734 and $0.826. The $0.734 level has seen significant long positions, totaling $18.8 million, while the $0.826 level has also seen $18.2 million worth of short positions.

These liquidation levels are key in determining ADA’s next price movements. If the price drops below $0.734, long positions could face liquidation, intensifying selling pressure. On the other hand, a push above $0.826 could lead to short liquidations, potentially driving the price higher.

Market Sentiment and Participation

While short-term traders seem to be acting cautiously, participation from long-term holders is on the rise. This suggests that, despite the current volatility, there is underlying confidence in the Cardano ecosystem, driven by its technological advancements and recent developments, such as the proposed Cardano ETF.

In the past 24 hours, trading participation has surged by more than 120%, signaling that more traders are entering the market, likely anticipating future price action. This increase in market activity could act as a catalyst for the next phase of ADA’s price movement, whether that means further consolidation or another leg up.

Conclusion

Cardano (ADA) is at a crucial juncture in its price action. While the rally has cooled off due to sell-offs and resistance at $0.85, the asset’s ability to hold above the 200 EMA indicates that the uptrend is still intact. Long-term holders are continuing to accumulate, even as short-term traders focus on market fluctuations. If ADA can break through its key resistance levels and sustain momentum, a rally to $1.13 is within reach. However, traders should remain cautious of potential liquidations and short-term market sentiment shifts as Cardano’s future direction remains closely tied to both on-chain metrics and technical analysis.