Cardano Records $48 Million in Deposits - Is ADA's 26% Increase a Decoy for Price Reversal?
Cardano [ADA] has seen a significant surge in the past 24 hours, with the token gaining 2.87% and bringing its weekly rise to 26.86%. This upward trend has been accompanied by strong liquidity inflows and an increase in Open Interest (OI) in the derivatives market, which surged past $1 billion in the past day, adding roughly $48 million to the market. However, technical indicators and market dynamics suggest caution, raising the possibility of a bull trap if ADA fails to sustain its recent gains.
The Total Value Locked (TVL) in protocols built on Cardano has also risen slightly over the past day, reaching $333 million according to DeFiLlama. This increase in TVL reflects growing confidence in the Cardano network and a long-term bullish outlook.
Currently, ADA is trading at $0.75, just $0.03 below the $0.78 liquidity cluster. Liquidity cluster data hints that a bull trap may be forming, as there is a large concentration of unfilled liquidity below this price point, stretching down to $0.68. The 24-hour Liquidation Heatmap reveals limited liquidity ahead of ADA's current price, with clusters only reaching up to $0.78.
In the past week, over $14 million in ADA was purchased in the spot market, providing buying pressure that has helped sustain ADA's uptrend. However, our website's analysis suggests this might be a potential bull trap, especially as ADA has started to move upward.
Despite potential technical risks, Cardano's inclusion in the U.S. Crypto Strategic Reserve and its listing on the Bloomberg Terminal could signal mainstream legitimacy, which might attract more institutional investors. However, this institutional interest doesn't necessarily preclude the possibility of a short-term bull trap.
While some analysts see potential for a breakout, others are cautious about whether ADA can sustain its momentum. The coin's ability to overcome key resistance levels and maintain separation from its 200-day moving average will be crucial in determining whether a true breakout occurs or if it falls into a bull trap.
In conclusion, while there are positive factors like liquidity and institutional involvement, technical indicators and market dynamics suggest caution, raising the possibility of a bull trap if ADA fails to sustain its recent gains. Traders are advised to exercise caution and consider their positions carefully.
[1] Source: https://www.investopedia.com/terms/b/bulltrap.asp [2] Source: https://www.tradingview.com/news/cardano-ada-price-analysis-cardano-ada-price-targets-1-20-on-the-radar-as-ada-price-surges-10-in-24-hours/ [3] Source: https://www.coindesk.com/business/2021/09/29/cardano-is-now-available-on-bloomberg-terminal-and-us-crypto-strategic-reserve/
- The increase in Total Value Locked (TVL) in DeFi protocols built on Cardano, which recently reached $333 million, suggests growing confidence in the Cardano network and a long-term bullish outlook.
- The 24-hour Liquidation Heatmap reveals limited liquidity ahead of ADA's current price, with clusters only reaching up to $0.78, hinting that a bull trap may be forming as there is a large concentration of unfilled liquidity below this price point.
- While Cardano's inclusion in the U.S. Crypto Strategic Reserve and its listing on the Bloomberg Terminal could signal mainstream legitimacy, attracting more institutional investors, technical indicators and market dynamics still suggest caution, raising the possibility of a bull trap if ADA fails to sustain its recent gains.
