- Despite facing significant resistance around the $0.50 price level, Cardano (ADA) has shown signs of resilience in its price action.
- Analyst Justin Bons accused Cardano’s parent company of controlling key aspects of the blockchain.
Cardano (ADA) has recently faced significant resistance around the $0.50 price. The trading volume over the last 24 hours has declined by 53% to $291,504,216, suggesting lower trading activity compared to the previous day.
This decline followed allegations by cryptocurrency analyst Justin Bons, who accused the blockchain project of extreme centralization. Bons pointed out that Input-Output Global (IOG), Cardano’s parent company, controls five out of seven of the blockchain’s “genesis keys.” These cryptographic keys were crucial in establishing the initial block of the Cardano blockchain in 2015.
1/8) Cardano has “genesis keys”; a multi-sig that controls all rules!
ADA is extremely centralized, as this is uniquely hardcoded into the protocol
IOG controls 5 out of 7 keys & can unilaterally change anything!
Ironic, as ADA claims to be the “most decentralized” chain: 🧵
— Justin Bons (@Justin_Bons) May 20, 2024
Bons argued that the control of these keys allows IOG to implement code changes seamlessly without requiring a hard fork. This capability gives IOG the power to halt the chain, alter emission schedules, and censor transactions, which Bons describes as an unprecedented level of centralized control for a Layer 1 blockchain.
Following Bons’s comments, ADA’s price entered a bearish setup that suggests a potential further decline of up to 30% by June. The price correction occurred after ADA tested a descending trendline resistance within a prevailing symmetrical triangle pattern. In technical analysis, such a pattern in a downtrend often indicates a bearish continuation, where the price is expected to break below the lower trendline and drop by the height of the triangle.
Cardano Bulls Defend Key Support
Despite the recent downturn, Cardano’s price action shows signs of resilience. After a rapid decline to $0.46, ADA bulls have stepped in to defend the $0.45 support level. On-chain data from IntoTheBlock indicates a strong buy wall at this price point, with 225 million ADA buy orders compared to 207 million sell orders.
This buying pressure suggests that the selling frenzy may be waning, with bears showing signs of fatigue. Consequently, ADA is likely to hold above the $0.45 support in the near term, avoiding a further double-digit decline. The price is expected to consolidate within the $0.45 to $0.48 range in the coming days, supported by the prevailing bullish sentiment in the broader crypto market.
Whales Accumulate ADA Amidst Price Decline
Amidst the price correction, there has been a noticeable accumulation of ADA by Cardano’s wealthiest addresses. Entities holding between 10 million and 1 billion ADA tokens have increased their holdings, suggesting confidence in the project’s long-term potential. This trend indicates that major investors are buying the dip, possibly anticipating a future price recovery.
Specifically, the supply held by addresses with 10 million to 100 million ADA tokens saw a sharp increase in late March, followed by stabilization. Meanwhile, the holdings of those with 100 million to 1 billion ADA tokens have steadily grown, particularly since mid-March. During this period, ADA’s price has dropped by over 20%, indicating that these investors are bullish on Cardano’s future despite the centralization concerns raised by Bons. As of this writing, Cardano is currently trading at $0.46, with a 24-hour decline of 0.44%.
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