Cardano short-term holders have now accumulated 3 billion ADA in just one month, with a surge in holdings indicating an increased confidence in the asset.
Cardano short-term holders (STHs) have significantly increased their holdings, adding over 3 billion ADA since October.
While this surge coincides with a broader market recovery that has allowed Cardano (ADA) to reclaim the crucial $1 price level, historical patterns raise some concerns about potential volatility.
As of now, STHs hold approximately 8.42 billion ADA, valued at around $9 billion, marking the highest level in eight months.
This increase indicates that these traders, who have held ADA for less than a month, acquired about 3.15 billion ADA this month alone, up from 5.27 billion on November 5.
This date is particularly noteworthy, as it aligns with a bullish market trend sparked by Donald Trump’s election victory, which catalyzed significant accumulation among short-term investors.
However, history shows that such spikes in STH holdings can often precede price corrections.
For example, in January 2022, when ADA reached a peak of $1.53, STHs boosted their holdings to 11 billion ADA, only for the price to plummet to $0.82 shortly thereafter.
Similarly, in March 2023, ADA surged to $0.75, but after STHs increased their balance to 8.4 billion ADA, the price corrected to $0.45 within weeks.
This pattern suggests that many of these short-term investors tend to enter the market during price surges driven by fear of missing out (FOMO) and often sell at the first signs of resistance, which can exacerbate downward pressure on the price.
On a more positive note, there are indicators that Cardano whales are also becoming active in the market.
If these larger holders purchase the ADA sold by short-term investors during price pullbacks, it could help cushion the asset against significant declines.
Additionally, recent data shows a surge in Cardano’s on-chain activity, with over 840,000 transactions and fees reaching 279,000 ADA, the highest since March 2022.
This uptick suggests a growing confidence in the Cardano ecosystem, contrasting with earlier speculative behaviors.
As of now, ADA is trading at $1.06, reflecting a 6.6% increase over the last 24 hours.
The interplay between short-term traders and larger investors will be crucial in determining Cardano’s price trajectory in the coming weeks.
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