Cardano (ADA) experienced a 7.25% decline in price, reaching $0.474 on May 22nd, following accusations from cryptocurrency analyst Justin Bons that the blockchain project is excessively centralized. Bons claimed that Input Output Global (IOG), the parent company of Cardano, controls 5 out of 7 of the blockchain’s “genesis keys,” which were used to establish the initial block of the Cardano blockchain in 2015. These keys allow for seamless code changes without the need for a hard fork. As a result of Bons’ comments, ADA’s price decline triggered a bearish setup that could lead to a further 30% price crash by June.
Cardano’s ongoing correction is occurring after reaching a familiar descending trendline resistance, indicating a bearish continuation pattern known as a symmetrical triangle. This pattern is characterized by two converging trendlines, one ascending and one descending, and typically resolves when the price breaks below the lower trendline, resulting in a drop of the maximum triangle height. As of May 22nd, ADA’s price was correcting after testing the upper trendline and is now expected to retreat towards the lower trendline at around $0.44 by the end of May, a decrease of 6.5% from current levels.
If a decisive symmetrical triangle breakdown occurs, ADA’s price could drop to the $0.336-0.366 range, representing a 20-25% decrease from the current price level. However, there is potential for a broader rally if the price breaks above its 50-3D and 200-3D exponential moving averages (EMA). In this scenario, ADA’s initial upside target would be around $0.67, a 35% increase from current levels. The $0.67 level has previously served as resistance in December 2023 and May 2022.
Despite the price correction, Cardano whales, or large holders of ADA, have been accumulating more tokens. The ADA supply held by the richest addresses has increased, indicating that these whales are disregarding Bons’ warnings about centralization and buying the dip in anticipation of further gains. This trend has been particularly notable among entities holding 100 million-1 billion ADA tokens.
It’s important to note that this article does not provide investment advice or recommendations, and readers should conduct their own research before making any investment or trading decisions.