Cardano Technical Analysis: Dump Next As 18.53M ADA Unlock Worries Bulls?

Cardano (ADA) has surged almost 300% since Donald Trump’s win in the US election race. On Dec. 3, it was trading for $1.327, its highest level since January 2022, albeit signaling extremely overbought conditions on all timeframes. A major drop could appear next, primarily due to massive token unlocking.

ADA/USD Four-Hour Price Chart: Expect Correction in December

Cardano is consolidating after hitting a local high of $1.327. The token has been trading near its 1.0 Fibonacci retracement line at around $1.199 on Dec. 3. Its relative strength index (RSI) at 56 signals neutral momentum after dropping from overbought levels.

That suggests the bullish momentum is fading. Meanwhile, the lack of significant selling volume during the pullback indicates consolidation rather than a reversal.

Immediate resistance lies at $1.297, while a break below $1.150 could open the door for a deeper correction toward the 50-4H exponential moving average (50-4H EMA; the red wave) at around $1.088 in December. The level aligns with ADA’s 0.786 Fib line.

ADA/USD Weekly Price Chart: Consolidation Period in 2025

ADA’s weekly relative strength index (RSI) has crossed above its overbought threshold of 70 and was treading near 84.62 on Dec. 3. Meanwhile, the Cardano token is trading below a key resistance level defined by its 0.382 Fibonacci retracement level near $1.282.

Both signals raise ADA’s probability of declining toward its 0.236 Fib line support of around $0.886 in December. An overbought RSI, for instance, leaves fewer potential buyers in the market to sustain the uptrend, increasing the likelihood of a reversal or a pause in the rally.

Meanwhile, a sustained breakdown below $0.886 could send ADA’s price toward its 50-week (red) and 200-week (blue) exponential moving averages (EMA) near $0.50, down about 60% from the current price levels.

Cardano Will Unlock $20M Worth of ADA Tokens

Additionally, Cardano will release 18.53 million ADA tokens on Dec. 6, valued at approximately $20 million. While the unlocked amount represents less than 0.1% of the circulating supply, the timing and market context surrounding this event could exert downward pressure on ADA’s price.

Psychologically, token unlocks are often viewed as bearish events, as they raise concerns that recipients of the newly released tokens could sell their holdings.

Even though the unlocked ADA will be allocated to staking and treasury reserves, the market may fear that some of these tokens could eventually be liquidated, creating uncertainty and a potential “sell the news” reaction.

ADA’s recent price rally provides an opportunity for profit-taking. Investors may see the token unlock as a trigger to cash out gains, especially given the speculative nature of the current market environment.