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Key Takeaways:
ADA has gained nearly 27% in a week, boosted by rising spot and derivatives market liquidity.
On-chain activity shows modest but positive growth, with TVL climbing to $333 million.
A looming liquidity cluster at $0.78 could trigger a short-term bull trap and price correction.
Cardano [ADA] has surged 26.86% in the past week, including a 2.87% gain in the last 24 hours, reigniting bullish momentum across both retail and institutional investor segments. However, deeper market data reveals a potentially dangerous setup forming beneath the surface.
Derivatives and Spot Markets Signal Strong Liquidity Inflows
A significant spike in market activity has accompanied ADA’s recent rally. Open Interest (OI) in ADA futures climbed over 3% in the past 24 hours, reaching $1.21 billion, per CoinGlass. This marks only the third time in 2024 that OI has surpassed $1.2 billion—levels previously associated with price zones of $1.00 to $1.17.
Historically, such increases in derivatives liquidity precede extended bullish phases, suggesting renewed trader interest. Meanwhile, the spot market has followed suit, with over $14 million in ADA accumulated over the past week, according to exchange netflow data. This surge in demand has helped propel ADA to $0.7522 at press time.
On-Chain Metrics Reinforce Uptrend, But Momentum Is Modest
Cardano’s Total Value Locked (TVL)—a measure of DeFi activity and investor trust—has also ticked upward. DeFiLlama reports that Cardano’s TVL now stands at $333 million, a subtle yet important increase that indicates growing confidence in the network’s long-term viability.
TVL growth often reflects healthy protocol usage and can bolster price strength if sustained. Combined with active accumulation in both derivatives and spot markets, this suggests ADA’s recent rally has a strong fundamental backbone—at least for now.
Liquidation Heatmap Raises Bull Trap Concerns
Despite these bullish signals, technical indicators hint that the rally may not last. According to AMBCrypto’s analysis, ADA’s liquidation heatmap reveals a concerning imbalance: the next major liquidity cluster sits at $0.78, while a much larger pool of unfilled orders lies far below, near $0.68.
This setup raises the risk of a bull trap—where prices briefly surge to lure in long traders before reversing sharply to liquidate those same positions. With ADA trading at $0.75, just $0.03 below the $0.78 liquidity zone, a sharp reversal may be imminent.
While Cardano continues to enjoy strong market support and bullish sentiment, the risk of a bull trap looms large. Traders should monitor liquidity clusters and on-chain data closely to avoid potential downside surprises.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: Cardano’s Tokeo Wallet Eyes XRP Ledger Integration, Sparking Cross-Chain Excitement
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
