Cardano [ADA] is currently displaying a pattern of tight consolidation on the daily chart, signaling a potential increase in volatility in the near future. This price action is reminiscent of the mid-February structure, with ADA trading at $0.75 and facing resistance at $0.79 at the time of writing.
The overall market sentiment for ADA remains bullish, with strong performance in both spot and futures markets. The likelihood of a retest of the $0.56 support zone seems low given the current momentum. Additionally, recent trading volume for ADA on the 25th of March, which reached 1.06 billion at $0.74, closely mirrors the accumulation phase seen in mid-to-late February, just before a breakout to $1.14.
The recent listing of ADA on BingX further bolsters the positive outlook for the cryptocurrency, potentially enhancing liquidity and market depth on a platform with over 10 million users. Furthermore, there has been noticeable capital rotation from Bitcoin to Cardano, as evidenced by a bullish shift in the ADA/BTC pair. This shift is likely fueled by Bitcoin’s consistent upward trend, which is encouraging investors to allocate funds into altcoins like Cardano.
Given these factors, it is highly probable that ADA will retest the $0.80 resistance level in the near term. However, a confirmed breakout above this level is not guaranteed, and there are risks of a bull trap forming at key resistance levels, potentially leading to reversals driven by distribution.
A closer look at Cardano’s derivatives market reveals an increase in risk appetite among traders, with Open Interest (OI) surging to $834 million and Funding Rates turning positive for the second consecutive session. Large Cardano entities have also been accumulating significant amounts of ADA, similar to the pattern seen during the late February expansion phase.
However, there are red flags indicating a possible bull trap for ADA. Macro-driven volatility continues to pose a risk, and a market-wide deleveraging event could occur. To avoid falling into a bull trap, ADA must decisively break above key resistance clusters and establish them as support levels. Failure to reclaim the $0.80–$0.85 range could lead to liquidation of overleveraged long positions, triggering a distribution phase and subsequent sell-offs.
In conclusion, while a retracement towards the $0.65 demand zone is a realistic possibility given the current market structure, bulls must work to turn resistance into solid support to prevent this scenario. Vigilance and caution are key in navigating the potential pitfalls of a bull trap in the ADA market. The Benefits of Regular Exercise
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