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Over the last two weeks, Cardano price has shot up significantly but is still far away from even establishing new 2023 highs.
The improving market conditions for ADA could trigger a sell-off among the holders.
The recent rallies from January and March have amplified the rate at which the altcoin is changing hands, suggesting restlessness and potential profit-taking.
Cardano price has had a disappointing run these last two weeks when compared to other major altcoins. However, following the lack of confidence in the asset has brought ADA investors to the point where they are looking to make gains anyhow, which in turn could prove to be harmful to the cryptocurrency.
The recent improvement in Cardano price has been a motivation for ADA holders to make recover the losses they have been bearing on their investment for a long time. After declining to the all-time low of $0.2404 towards the end of December 2022, ADA rallied by more than 72%.
This triggered movement among the investors that had been dormant for a while. The ADA sitting in these addresses began changing hands, which is visible in the spike of the cryptocurrency’s velocity.
Sitting at a nearly four-year high, the rising activity indicates that investors have been and might continue to sell their ADA to offset the losses witnessed in Q3 and Q4 last year.
Cardano velocity
This behavior could intensify going forward if the condition of the asset improves. The Market Value to Realized Value Ratio (MVRV) highlights that the average return on investments is improving, albeit being still negative.
While over the short-term (30-day period), the demand has pushed the indicator into the positive zone above the neutral line, the macro timeframe suggests a while before it could happen.
Cardano MVRV ratio
However, even minimal improving conditions may still be enough to trigger a sell-off among desperate investors, resulting in corrections.
Trading at $0.3772, Cardano price is looking to attempt a breach of the critical resistance level at $0.3984, which also marks the 200-day Exponential Moving Average (EMA). Flipping this level into a support floor would push ADA toward the 2023 highs of $0.4206, marking an 11% rally. The Relative Strength Index (RSI) supports this narrative as sitting in the positive zone, Cardano has room for growth.
ADA/USD 1-day chart
Nevertheless, failure to breach or selling at the hands of investors could bring about a decline in Cardano price, leading to a retest of the critical support at $0.3527. Losing the same would invalidate the bullish thesis and result in a fall to March lows of $0.3014, causing a 19% crash.
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