After a bloody sell-off for most of this past week, major cryptocurrencies struggled to rebound over the weekend, adding about 8% to the overall market capitalization.
The relief spike was driven by a combination of factors including strong sentiments of the market being oversold, prompting traders to place purchase orders for the heavily discounted prices. Analysts have also pointed the rise to what’s referred to as a short squeeze.
A short squeeze unfolds when traders short an asset only for it to shoot up. They now have to buy assets to cover the short positions. The dramatic spike in price “squeezes” those who shorted the asset.
That said, this month’s sell-off has sparked a wave of market activity, with transactions spiking remarkably on Bitcoin and Ethereum networks this past week, ZyCrypto reported.
On Friday, crypto analytics firm Santiment reported surging transactions on the Cardano Network, with ADA dropping to a low of $0.4 on May 12.
“Cardano whales showed a flurry of transactions yesterday as prices were bottoming out to $0.40, between 8 am and 12 pm UTC.” The firm tweeted. “These spikes have very commonly indicated price direction changes for ADA.”
On Thursday alone, ADA saw 1085 transactions worth more than $100,000, the largest since January.
After dumping a total of 1.7M tokens in the past 7 or so months, last week, it emerged that ADA whales with a balance of 1M-10M coins have been accumulating more coins during the sell-off, buying over $200M worth of ADA in the past 2 weeks.
With price tapping a multi-year low of $0.4 which also acts as strong support, in addition to the upcoming Vasil hard fork in June that seeks to greatly enhance the Cardano network, it can be seen why whales have been so active lately.
As of writing, ADA is trading at $0.56 after soaring 2.54% on the day. Cardano is currently the seventh largest crypto asset with an $18.9 billion market valuation.