Cardano’s 300% Rally Faces Test as Retail Investors Begin Taking Profits

• Small Cardano holders sell 72M ADA worth $92M amid price surge
• Price-network activity divergence signals potential sustainability concerns
• Critical resistance at $1.30 could determine rally’s future

The cryptocurrency market is witnessing a fascinating situation with Cardano (ADA), as its phenomenal 300% price surge over five weeks creates an intricate balance between continued momentum and emerging profit-taking behavior. Having broken through the psychologically significant $1 mark to reach levels not seen in nearly two years, the market now faces a crucial test of sustainability.

Cardano holder behavior

A notable trend has emerged among smaller market participants, with wallets holding between 100 and 10,000 ADA collectively disposing of more than 72 million tokens, valued at over $92 million.

This sustained selling activity over the past month represents a significant shift in retail investor sentiment, as these smaller holders choose to secure profits rather than maintain exposure to potential market volatility.

The Price DAA Divergence indicator reveals an intriguing disconnect between price action and market participation. While ADA’s price continues to climb, network activity isn’t keeping pace – a situation that traditionally signals potential sustainability concerns.

This divergence suggests the current rally might be driven more by speculative forces than by fundamental market demand, raising questions about its long-term viability.

The recent 25% Cardano weekly surge has brought ADA to $1.29, establishing a critical juncture at the $1.30 resistance level. This price point represents more than just a psychological barrier – it serves as a key technical level that could determine the rally’s future trajectory.

A successful conversion of this resistance into support could pave the way for Cardano to push toward $1.50, while failure to hold this level might trigger a retreat to $1.01.

The convergence of retail profit-taking, network activity divergence, and critical technical levels creates a complex market environment. While the current price action remains impressive, the sustainability of this rally will likely depend on whether larger investors step in to absorb the selling pressure from retail holders and whether market participation can align more closely with price appreciation.

The coming weeks will be crucial in determining whether this 300% surge represents the beginning of a larger trend or a temporary peak in Cardano’s market cycle.