Cardano's (ADA) price has been in a bullish rally as its 24-hour trading volume soared past $550 million on May 2. This surge in trading activity coincided with a significant uptick in the token's value, reflecting renewed interest in the cryptocurrency. At the time of writing, ADA was trading at $0.4504, marking a 0.63% increase in price over the last 24 hours.

However, the 24-hour trading volume at press time had gone down by 22% to $343.85M reflecting a cautious approach to the market by traders. 

ADA/USD 24-hour price chart (source: CoinMarketCap)

Positive Indicators Amidst Challenges

Despite the recent price surge, Cardano has faced challenges in maintaining a consistently upward trajectory. Since mid-March, ADA has been on a downward trend, characterized by successive lower lows and lower highs. To reverse this trend, ADA would need to surpass the $0.5761 level, a goal that seems distant given the current trading price.

ADAUSD 4-hour price chart (source: TradingView)

However, amidst these challenges, there are positive indicators suggesting the potential for ADA's bullish momentum to continue. The Chaikin Money Flow (CMF) for ADA has surged to 0.6, indicating a significant influx of capital into the token. Additionally, the Relative Strength Index (RSI) for ADA has shown an increase, signaling growing bullish momentum. These factors provide some optimism for ADA holders, despite the need for a substantial price increase to trigger a trend reversal.

Analysis of on-chain data reveals an increase in the velocity of ADA trading, indicating heightened market activity. While this surge in trading frequency may signal positive sentiment among traders, the MVRV ratio remains negative, suggesting that most ADA holders are currently not profitable. This lack of profitability reduces selling pressure on the ADA token, potentially contributing to its price stability in the short term.

ADA MVRV Ratio

Whale Accumulation Amidst Market Volatility

In the midst of increased market volatility, whales in the Cardano ecosystem have been strategically accumulating ADA at an accelerated pace. Despite a recent 23% price drop in the last month, large investors continue to accumulate ADA, indicating a divergence in sentiment between institutional and retail investors. On-chain data highlights a significant uptick in whale activity, with a daily average of $13.84 billion in large transactions recorded over the past week.

This surge in whale accumulation suggests a long-term investment perspective among large investors, who may anticipate a potential price reversal in the future. However, despite whale accumulation, Cardano's price has faced significant downward pressure, trading below key moving averages and exhibiting negative market sentiment.

While Cardano's recent price rally may provide short-term optimism, the broader market outlook remains uncertain. Cryptocurrency experts predict a range of potential price movements for ADA in the coming months, with some analysts suggesting a struggle for ADA to reclaim the $0.5 level by the end of May.

ADA Whale Transactions

A pivotal aspect of the recent ADA rally is the significant rise in large transactions, specifically those exceeding $100,000. These transactions have reached their highest level since November 2023, indicating robust whale activity within the market. Such large-scale transactions often suggest a strategic accumulation of ADA by high-net-worth individuals or institutional players, potentially signaling an anticipation of further price increases or a strategic positioning for long-term holdings.