The price of Cardano has dropped more than 20% between January 14 and January 25, falling to a new short-term low. On the surface, this movement of ADA seems to be bearish and untrustworthy.
However, beneath the surface, something entirely different is happening. While the price of ADA is decreasing, large investors are quietly beginning to accumulate, with two positive factors explaining why this drop is attracting buyers rather than panic. So how might the price of Cardano respond moving forward?
Large capital continues to accumulate while retail investors retreat.
The first signal comes from wallet behavior, with data showing that major ADA holders (whales) did not sell during the price drop but instead began accumulating at the lowest price levels.
Wallets holding ADA between 10 million and 100 million coins increased their holdings after January 25, when the price hit a low, with their total increasing from around 13.59 billion ADA to 13.62 billion ADA, even as prices remained weak. At the current price of about 0.35 USD, this accumulation is worth over 10 million USD.
The smaller yet influential group is also joining in. Wallets holding ADA between 1 million and 10 million coins reduced their holdings during the price drop, but when ADA's price started to stabilize, they returned as buyers. The total assets in this group increased from about 5.60 billion ADA to 5.61 billion within a day, or approximately 3.5 million USD.
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This accumulation is significant because it occurs while retail investors or smaller ADA holders are moving in the opposite direction, with wallets holding ADA between 100 and 10,000 coins reducing their holdings, becoming more cautious and avoiding risk.
Each of these groups started selling coins before 2026 and has been gradually selling off over the past period. This polarization is very important because large investors tend to buy during periods of market fear, while smaller ones tend to sell to alleviate anxiety.
2 bullish indicators suggest that selling pressure is weakening.
The second layer of evidence comes directly from the chart, where one momentum indicator is signaling an initial reversal, which may be something the whales are watching.
This indicator is the RSI or Relative Strength Index, which measures momentum and helps identify when selling pressure begins to weaken. From December 18 to January 25, the price of ADA made lower lows, while the RSI did not, instead making higher lows.
This is a bullish divergence pattern by standard, indicating that sellers are losing control. Even though prices still look weak, such signals often appear ahead of trend reversals, not afterward. While making lower lows, the price of ADA has retraced more than 20% as part of the downtrend. Recently, the swings have created a bear flag pattern, but the strength of the RSI, along with the accumulation pattern by whales, indicates that a correction may not actually occur.
The second signal is the MFI or Money Flow Index, which tracks whether money is flowing in and out of an asset by combining price and trading volume. From January 21 to January 26, the price continued to decline while the MFI moved higher.
This shows important data that while prices are falling, there is accumulation. Therefore, capital is flowing in instead of out, supporting data from the wallets already observed that large capital moves during a bear market, not sitting idle waiting outside the market.
When the RSI shows that momentum is beginning to stabilize and the MFI indicates buying during pullbacks, the chance of a complete correction decreases. While it does not confirm that a recovery will happen immediately, it clearly reduces the likelihood of a downward trend.
The price level of Cardano determines the next direction.
When there are accumulation signals and clear momentum, the price level of Cardano is the most important right now.
Currently, ADA is trading near 0.35 USD, with the first key technical resistance around 0.390 USD, which is halfway of the previous drop and also aligns with important Fibonacci levels. If it breaks through, it will immediately invalidate the bear flag structure on the daily chart.
However, the first important resistance is actually the 20-day EMA or the exponential moving average, which gives more weight to recent prices and helps track short-term trend direction. The last time ADA managed to stay above this EMA was on January 2, when the price rose more than 17%.
If ADA can close above the 20-day EMA again, momentum may change rapidly. In this case, resistance levels near 0.427 USD and even 0.484 USD will come back into focus.
Conversely, risks still exist. If the daily close is below 0.339 USD, the recovery will weaken. Falling below 0.332 USD will invalidate the bullish divergence setup and reopen the risk on the downside.
For now, the message is still clear. A 20% drop has not frightened large capital but instead drawn them in. Two positive indicators show the reasons. However, whether the price will continue to move forward depends on the daily close in the next few days.