Cardano’s Recent Price Action and Market Sentiment

ADA’s historical price action and key technicals were aligning with its 2021 cycle.
If history rhymes, could another major breakout be on the horizon?

Ten days after Cardano’s (ADA) historic single-day surge of 72% to $1.14, the price has fully retraced, dropping back to the $0.70 range.

This sharp pullback comes amid a broader risk-off sentiment. Yet, the ADA/BTC pair is flashing green, suggesting investors may be shifting into high-cap assets for stability.

Notably, ADA’s weekly structure mirrors its 2021 cycle, when a 52% drop led to an 11-week consolidation before a 4,000% breakout to $3.10.

At press time, ADA was down 47% and consolidating for five weeks from this cycle’s high.

Despite the overall bearish market sentiment, ADA has shown relative strength, remaining 110% above its election day opening price of $0.34.

On the 1D chart, the altcoin’s price action is within a key support zone, with the RSI nearing oversold conditions. If on-chain metrics confirm accumulation, this setup could indicate a high probability reversal.

With historical price trends and key technical indicators aligning, could ADA’s current position be a bear trap before its next explosive breakout?

Looking into ADA’s Long-term Outlook

Derivatives data highlights de-risking, with Open Interest (OI) dropping 11.79% to $734.16 million as $750 million was unwound within two weeks.

Meanwhile, spot market demand stays strong, with withdrawals outpacing inflows and trading volume increasing 12% to $2.01 billion. This suggests sustained buying pressure.

Meanwhile, a 15 million ADA uptick in the Spent Coin Age Band (90-180 days) suggests mid-term holders are moving funds. This could signal early-stage distribution.

With sell-side liquidity being absorbed, ADA may be setting up for deeper consolidation below $1, as futures unwinding meets steady spot demand.

In the coming days, the market will reveal whether this consolidation phase persists. If it holds, a bear trap could emerge, potentially triggering short-seller liquidations as market conditions shift. This could pave the way for a rally reminiscent of 2021.