Cardano's Fragile Stability: Can Short-Term Buyers Sustain the Bullish Case?

Cardano (ADA) has long been positioned as a third-generation blockchain with a focus on scalability and sustainability. However, as the network enters late 2025, its price action and on-chain dynamics reveal a fragile equilibrium. While short-term buyers have absorbed supply amid increased selling by long-term holders, derivatives positioning and technical indicators suggest a precarious outlook. This analysis examines whether the current bullish case-driven by on-chain holder behavior and derivatives activity-can withstand the pressures of a bearish macro environment.

On-Chain Holder Behavior: A Tale of Two Cohorts

Cardano's on-chain holder distribution in Q3 2025 highlighted a decentralized governance model with a staking rate of 59% and a growing user base, as daily transactions and active addresses rose by 15.7% and 19.2%, respectively. However, the narrative shifted in late December 2025 and early January 2026. Data indicates that long-term holders (those holding ADA for 365 days to 2 years) significantly increased their selling activity, with the spent coins age band surging by 135% on January 9. Conversely, short-term traders (holding ADA for 30–60 days) reduced their selling by nearly 92%, suggesting a "buy the dip" strategy.

This divergence reflects a critical dynamic: while short-term buyers are stabilizing ADA's price near $0.40, long-term holders are offloading tokens, potentially signaling a lack of conviction in the asset's long-term value. The price has held above $0.38, a key support level, but faces resistance near $0.401. Technical analysts note that ADA is trading within a descending wedge pattern, a bullish formation if broken to the upside, but a bearish signal if it fails to break out.

Derivatives Positioning: Mixed Signals and a Bearish Bias

Derivatives markets provide further insight into trader sentiment. In December 2025, ADA's futures open interest (OI) rose by 2.33% to $729.41 million, with a funding rate of 0.0054% indicating a bullish tilt. By early January 2026, however, the funding rate increased to 0.0076%, and OI climbed to $856 million-the highest level since October 2025. While a positive funding rate typically favors longs, over 55% of tracked positions were skewed to the short side by January 4, signaling reduced confidence in a near-term rebound.

This duality underscores a key contradiction: while leveraged traders are betting on a price rebound, the broader market remains bearish. Derivatives data also reveals a defensive positioning strategy, with traders hedging against downside risks. For instance, the Chaikin Money Flow (CMF) has trended downward during recovery attempts, indicating weakening capital inflows. Meanwhile, a head-and-shoulders pattern suggests a breakdown risk below $0.29, which could drive ADA toward $0.24.

The Bullish Case: Short-Term Resilience vs. Long-Term Uncertainty

Short-term buyers have provided temporary stability, particularly as decentralized exchange (DEX) volume on Cardano surged to 450 million ADA in December 2025-surpassing the previous year's peak. This activity suggests growing ecosystem engagement, which could attract new liquidity. However, the reliance on short-term traders raises concerns. As noted by on-chain analysts, such buyers often lack the capital to sustain prolonged rallies, especially in a macro environment marked by high volatility and risk-off sentiment.

Moreover, the staking rate of 59% implies that a significant portion of ADA is locked in staking pools, reducing the circulating supply available for trading. While this could theoretically support price, it also means that any large-scale unstaking or selling by long-term holders could exacerbate downward pressure.

Conclusion: A Delicate Balance

Cardano's current stability hinges on the interplay between short-term buyers and long-term sellers. While the former have temporarily propped up ADA's price, the latter's aggressive offloading and bearish derivatives positioning suggest a fragile equilibrium. Technical indicators like the descending wedge and CMF trends add further uncertainty, as does the risk of a breakdown below $0.38.

For investors, the key question remains: Can short-term buying pressure overcome structural headwinds, or will the bearish bias in derivatives and on-chain selling erode the bullish case? The answer likely depends on whether Cardano's ecosystem can generate sustained demand-through staking rewards, governance participation, or real-world adoption-to offset the selling pressure from long-term holders. Until then, ADA's path remains fraught with volatility and uncertainty.