Cardano (ADA) has been grappling with a noticeable slowdown in large transaction volume and network engagement over the past week. From November 23 to today, the large transaction volume dropped from $45.41 billion to $26.34 billion—a decrease of $19 billion. This significant reduction in large transactions could be a sign that institutional investors and whales are pulling back from Cardano, which could spell trouble for ADA’s price in the near term.

What Do Large Transactions Indicate for ADA?

In the world of cryptocurrency, tracking large transactions—those over $100,000—is an important way to gauge the behavior of institutional players and high-net-worth individuals. Typically, a rise in large transactions indicates heightened interest from these “whales,” which often correlates with price increases due to the demand they create. However, the recent decline in transaction volume suggests that these key players may be scaling back their involvement, which can have a negative impact on the market sentiment surrounding ADA.

Historically, ADA has shown positive price movement alongside an uptick in large transactions. For instance, between November 16 and November 23, ADA’s value surged from $0.57 to $1.09, coinciding with a rise in large transactions. This trend suggests that whale activity has had a significant role in driving ADA’s recent price rallies.

Declining Active Addresses Point to Waning Network Engagement

In addition to the drop in large transactions, there has also been a decrease in the number of active addresses on the Cardano network. This drop in network activity signals a lack of engagement, which could indicate a bearish sentiment among investors. If fewer users are interacting with the network or holding ADA, it suggests reduced confidence in the altcoin’s prospects, which could lead to further price declines.

Technical Indicators Show Potential for Downside

The technical indicators for ADA are also raising concerns. The Relative Strength Index (RSI) has moved into overbought territory at $1.04, signaling that ADA might be due for a price correction. RSI readings above 70 typically indicate that an asset is overbought and could face downward pressure.

Furthermore, the Bollinger Bands are tightening, suggesting that ADA’s price may experience increased volatility in the near future. When the bands contract, it often precedes a significant price move, which could be either bullish or bearish. Given the current market dynamics, it’s likely that the upcoming movement could be to the downside.

Support and Resistance Levels to Watch

As the ADA price trends lower, the most immediate support level is at $0.82, where the token could find some buying interest if the selling pressure intensifies. If this level is breached, ADA may struggle to maintain its bullish momentum, potentially dipping further. On the other hand, the next resistance level lies at $1.04, which has already proven to be a crucial threshold for the altcoin.

What Does the Future Hold for Cardano?

With a substantial drop in whale activity and weakening network engagement, the outlook for Cardano remains uncertain. If large transactions continue to decline, the price of ADA could face downward pressure, especially if broader market conditions also turn bearish.

However, if the market sentiment shifts and whales begin to re-engage, the downward trend could reverse. Cardano’s potential for long-term growth remains intact, but in the short term, traders and investors should closely monitor key support and resistance levels to gauge ADA’s next move.