The price of Cardano (ADA) is currently struggling to surpass the key resistance level of $0.40 despite a surge in network activity. Last week, long-term investors inadvertently caused a price correction by booking profits. The question remains as to whether the bulls will be able to turn the bearish momentum around this week.

On May 31, Cardano’s daily transactional activity hit a record high of 105,000 transactions, the first time since December 2022. However, this has not translated into significant price gains for ADA. Data on-chain indicates that the bearish trading activity of long-term investors could be slowing down any bullish momentum. What are the chances of the bulls regaining control of the market in the coming weeks? 

Long-term Holders of Cardano are Booking Profits

The Santiment chart below shows a considerable spike in ADA Age Consumed since May 26, indicating the selling off of a significant amount of coins by long-term investors as the ADA price approached $0.40.

When the ADA Age Consumed metric spikes significantly, as seen above, it is an indication that long-term holders are selling off significant amounts of coins. The profit-taking frenzy among long-term investors may potentially alarm other strategic investors about the project’s future prospects.

Investors are Expected to Sell

It seems that Cardano traders may continue selling until the price drops by another 2%. The Market Value to Realized Value ratio shows that most crypto investors who bought ADA in the past month are holding unrealized losses of around 3%. Historical trading patterns reveal that ADA holders may be willing to take up to 5% losses before they start selling. 

The MVRV ratio evaluates the financial position of current token holders to estimate the percentage of their unrealized losses or profits. According to the chart above, Cardano’s price will likely drop slightly further before the bulls can start regrouping for another rally. 

In summary, the bearish trading activity among Cardano’s long-term investors and the relatively low levels of unrealized losses could result in a drop in the price of ADA in the coming days.

ADA Price Prediction: A Reverse to $0.34 is Likely

The profit-taking frenzy among long-term investors suggests that the price of ADA may drop to $0.34. However, the In/Out of the Money Price (IOMAP) distribution data from IntoTheBlock indicates that the ADA price may experience bullish support around $0.36.

At this zone, 193,580 addresses bought 2.12 billion ADA coins at an average price of $0.36, forming a buy-wall.

If this support fails, the ADA price is likely to slump further towards $0.34. However, the bullish narrative can be negated if the ADA price can surpass the resistance level of $0.40. Some of the 182,000 investors who purchased 3.2 billion coins at the maximum price of $0.39 may resist, but if that level does not hold, the ADA bulls can push the rally as far as $0.43.