Cardano's native token, ADA, has experienced significant volatility as the community grapples with a pivotal governance proposal, creating a complex trading environment. Initially, the token showed strong bullish momentum, climbing 3% to a high of $0.6502. This rally was underpinned by a significant network milestone, as data from an X post by TapTools confirmed that Cardano had surpassed 1.3 million staking addresses. This fundamental strength, showcasing long-term holder confidence, helped ADA establish support first at $0.637 and later near $0.648. During this upward push, trading activity was robust, with one notable minute between 07:15–07:16 GMT seeing a volume surge of over 5.3 million ADA, propelling the price by nearly 0.4%. This period was characterized by higher lows and steady volume, suggesting a pattern of bullish accumulation despite reports of whale outflows totaling 270 million ADA in the preceding week.

Cardano (ADA) Volatility Spikes as Community Debates $100M Treasury Proposal

The optimistic sentiment was abruptly challenged by a contentious governance debate, which triggered a sharp market reaction. The proposal, highlighted by TapTools, involves allocating 140 million ADA (approximately $100 million) from the Cardano treasury to bolster stablecoin liquidity, particularly for assets like USDM, and energize its decentralized finance (DeFi) ecosystem. However, the plan immediately divided the community. Influential account @cardano_whale voiced strong opposition, arguing that injecting 140 million ADA of potential sell pressure into the current market could be detrimental. The concern is that traders would front-run the treasury's sale, potentially pushing the execution price far below the intended target. This perspective favors alternative solutions like minting crypto-backed stablecoins to avoid direct selling pressure on ADA's price.

Technical Levels to Watch Amid Governance Turmoil

In a strong rebuttal, Cardano founder Charles Hoskinson dismissed these concerns as a “false narrative.” He proposed that the treasury could liquidate the ADA holdings gradually through over-the-counter (OTC) deals or algorithmic strategies like Time-Weighted Average Price (TWAP) orders to minimize market impact. Hoskinson emphasized that insufficient stablecoin depth is a critical barrier to Cardano's DeFi growth, and this initiative could create a sustainable, non-inflationary revenue stream for the treasury. The market's reaction to this debate was swift and decisive. ADA’s price tumbled 6.01%, falling from a high of $0.688 to a low of $0.625. Volume spiked significantly during the breakdown, particularly between 01:00–02:00 UTC, establishing a firm support level at $0.622. Since this drop, ADA has been trading in a narrow range. Based on current data, the ADAUSDT pair is trading at $0.5779, well below the debate's price levels, indicating that the market remains cautious. The 24-hour range for ADAUSDT is between $0.5704 and $0.5779, suggesting consolidation after the sell-off.

For traders, the key levels are now clearly defined. Immediate resistance lies at the former support of $0.625 and higher up at $0.645, which has capped recent recovery attempts. Support remains at the $0.622 low, with subsequent buying interest seen near $0.5704. The ADA/BTC pair, currently at 0.00000534 BTC, is down 0.56%, showing ADA underperforming Bitcoin slightly amid this internal uncertainty. In contrast, the ADA/ETH pair is up 1.84% to 0.00030470 ETH, suggesting some relative strength against Ethereum. Meanwhile, major competitor Solana (SOL) is trading at $147.02, also experiencing a slight downturn. The resolution of Cardano's treasury debate will be a major catalyst. A decision to proceed could introduce short-term volatility but unlock long-term DeFi potential, while a rejection might stabilize the price but leave the liquidity problem unsolved. Traders should monitor governance channels closely and watch for volume changes around the key support and resistance levels for signs of the market's next directional move.