Cardano (ADA) is currently facing renewed selling pressure as short-term holders begin cashing out profits, raising concerns about further downward movement. As the broader cryptocurrency market remains shaky, Cardano’s recent performance has highlighted its vulnerability, especially among investors with a short-term focus.

Short-Term Holders Begin Taking Profits

Recent data suggests that short-term holders, commonly referred to as STHs, are increasingly opting to sell their ADA holdings. This comes at a time when their profit margins have reached levels not seen in over five months. According to on-chain analysis, the Market Value to Realized Value (MVRV) Long/Short Difference for Cardano has dropped to -18%, the lowest reading since November 2024. This indicator essentially compares the market value of ADA to the average purchase price of coins held by short-term and long-term investors.

A negative MVRV difference, especially one this significant, indicates that many STHs are sitting on notable profits. Historically, when short-term holders reach this point, they often sell their assets, applying downward pressure on the asset’s price. In Cardano’s case, this could contribute to a further weakening of its already fragile market position.

Declining Investor Confidence Reflected in Money Flows

Further signs of weakness can be observed in Cardano’s money flow indicators. The Chaikin Money Flow (CMF), which tracks the net flow of capital in and out of an asset, has been in decline since late 2024. The indicator currently remains below the zero line, pointing to sustained capital outflows from ADA. This suggests that investors are increasingly cautious, with many choosing to exit rather than enter new positions in Cardano.

This lack of investor confidence aligns with ADA’s recent price behavior. Cardano has been attempting to recover but has repeatedly failed to break above the key resistance level at $0.63. The ongoing bearish sentiment in the market is preventing any significant rebound, and without a shift in momentum, the altcoin appears unlikely to mount a recovery in the near term.

Price Outlook Remains Bearish Without Strong Market Reversal

At the time of writing, Cardano is trading at approximately $0.61, remaining below its critical resistance. If the current bearish trend continues, ADA could slip further, potentially revisiting the $0.57 support level. Such a move would deepen losses for investors and reinforce the downward trend that has persisted for several weeks.

A drop to $0.57 would represent a substantial setback for ADA’s price action and would likely discourage new buyers from entering the market. The bearish momentum is not only technical but also sentiment-driven, making a recovery more difficult without broader market improvement.

Recovery Possible If Sentiment Shifts

However, a shift in broader market conditions could still turn things around. If overall crypto market sentiment improves and investors regain confidence, Cardano may have an opportunity to break above the $0.63 resistance. Doing so would invalidate the current bearish outlook and open the door for a move toward $0.70, which would represent a significant reversal in momentum.

For now, though, Cardano remains in a vulnerable position, with short-term holders’ profit-taking behavior signaling continued pressure on its price in the near term.