Cardano [ADA] has faced a significant 18% slump over the past week, leading to growing concerns about its future prospects. Along with the price decline, whale activity has drastically reduced, signaling potential weakening confidence in ADA. This combination of a price drop and diminishing whale interest raises questions about whether this is just a temporary setback or the start of deeper challenges for Cardano.

Cardano’s Price Decline: A Sign of Market Weakness?

The 18% drop in ADA’s value has extended an ongoing downtrend that began in early February. Analyzing the daily chart reveals a lack of solid support, with the formation of lower highs and lower lows, which suggests a bearish sentiment. The RSI is at 36.37, just above the oversold zone, indicating weak buying pressure but leaving room for a potential short-term rebound.

Despite some defensive buying as ADA dipped below $0.65 before slightly recovering, without stronger demand, any upward movement may prove to be short-lived. The OBV, or On-Balance Volume, continues to decline, showing that sell pressure remains strong, and accumulation is weak.

External Factors Contributing to ADA’s Decline

Aside from the technical indicators, external factors have played a role in ADA’s current downturn. The $1.5 billion hack at Bybit in February 2025 triggered a broader market sell-off, exacerbating ADA’s losses. Additionally, there is growing uncertainty around Cardano’s regulatory future. The SEC’s acknowledgment of a Cardano ETF proposal has fueled speculation, with the approval potentially driving long-term institutional adoption, but also increasing short-term volatility.

Falling Whale Activity: A Signal of Waning Confidence?

One of the most concerning developments for Cardano is the sharp reduction in whale activity. Data from Santiment reveals that the number of whale addresses holding between 1 million and 10 million ADA has dropped to 2,454, the lowest level since January 9, 2025. The departure of large holders or their hesitation to accumulate further suggests that confidence in Cardano’s near-term prospects is fading.

Whale addresses are a key indicator of market sentiment, as these entities are responsible for driving liquidity and stabilizing prices. Their reduced involvement could intensify market volatility, making ADA more vulnerable to further downward pressure. Without strong whale participation, ADA may struggle to form reliable support levels, prolonging its bearish trend.

Implications of Reduced Whale Participation

If the decline in whale addresses continues, it could signal significant long-term implications for Cardano. Reduced whale participation might lower liquidity, making the asset more prone to volatile price swings. Additionally, sustained selling pressure from large holders could deter institutional investors, limiting ADA’s potential for upside growth.

That said, if smaller investors step in to fill the gap left by the whales, the market structure of ADA could shift towards a more decentralized distribution. This shift could influence its long-term trajectory, though the next few weeks will be crucial in determining whether ADA is in the midst of a temporary pullback or facing more profound challenges.

Conclusion

Cardano’s recent slump, combined with reduced whale activity, raises serious concerns about its near-term future. The next few weeks will be critical in determining if ADA can regain momentum or if this downtrend signals a more significant shift in its market dynamics. Investors will need to keep a close eye on whale activity and broader market sentiment to gauge the asset’s potential for recovery.