As much of the cryptocurrency market rebounds following the latest U.S. Federal Reserve interest rate cut, Cardano (ADA) is decoupling from the positive trend with significant losses. Ironically, the launch of the “Midnight” sidechain and its associated token distribution have generated selling pressure instead of the anticipated growth narrative. Market attention is now fixed on major investors moving substantial holdings toward exchanges.
Whales Shed Holdings Amid Market Anxiety
Blockchain data reveals concerning activity from large holders, amplifying market nervousness. The tracking service Whale Alert reported a transfer of 150 million ADA between unknown wallets, an event that coincided with a rapid price decline. More significantly, approximately 750 million ADA was moved to Binance, the world’s largest crypto exchange, earlier this week. Market analysts typically interpret such inflows to trading platforms as preparation for sell-offs.
Paradoxically, the Cardano blockchain simultaneously recorded a nine-month high in transaction volume. Observers suggest this activity likely stems not from organic growth but from the frenetic movements surrounding the airdrop and subsequent panic selling.
Midnight Network’s Rocky Debut Weighs Heavily
The primary catalyst for the current downturn is turbulence surrounding the Midnight Network and its NIGHT token. Conceived as a privacy-focused partner chain for the Cardano ecosystem, the launch proved disastrous for many investors. The value of the NIGHT token collapsed by roughly 90 percent within just two days of its distribution.
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This extreme volatility has fueled community concerns over an oversupply and potentially flawed token economics, with the negative sentiment directly impacting ADA’s price. While founder Charles Hoskinson has defended the project, emphasizing its long-term utility, the market is initially responding with risk reduction. Investors perceive the launch issues as a short-term burden on the broader ecosystem.
Bearish Sentiment Grips Derivatives Market
The derivatives market paints an equally bleak picture. Open Interest for Cardano futures contracts has plummeted from nearly $2 billion in September to a range of $725 million to $773 million. This indicates a massive withdrawal of speculative interest. Currently, short positions—bets on further price declines—dominate the landscape, commanding a market share of just under 55 percent.
The technical outlook has deteriorated sharply as a result. ADA is currently trading at $0.42, positioned far below its 50-day moving average. The token has already shed more than 24 percent of its value over the past 30 days.
Key Support Level in Focus
All eyes are now on the psychologically significant $0.40 support level. Analysts warn that a breach of this floor could trigger a further retreat toward the annual lows around $0.37. A sustained stabilization is only expected once sentiment around the Midnight project improves and the aggressive outflow of holdings by large investors ceases.
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