Cardano (ADA) has experienced a notable surge, gaining 2.87% in the past 24 hours and a substantial 26.86% over the week. This rally is accompanied by a significant liquidity inflow, with Open Interest (OI) in the derivatives market climbing over 3% to reach $1.21 billion, adding approximately $48 million to the market, according to CoinGlass data.
This marks the third time this year that ADA's OI has surpassed the $1.2 billion level, a phenomenon previously observed in March when ADA traded at $1.17, and throughout much of January when its price hovered around $1. Historically, such liquidity inflows have been considered bullish indicators, often preceding further upward price movements.
The spot market also reflects a strong buying sentiment, with data from Spot Exchange Netflow indicating that over $14 million in ADA was purchased in the past week. This sustained buying pressure has supported ADA's uptrend, with the token trading at approximately $0.7522 at press time.
On-chain metrics further bolster the bullish narrative, albeit on a more modest scale. The Total Value Locked (TVL) in protocols built on Cardano has slightly increased over the past day, reaching $333 million, according to DeFiLlama. This suggests growing confidence in the network and a long-term bullish outlook. Continued growth in TVL could further reinforce the accumulation trend in both spot and derivatives markets, helping ADA maintain its positive trajectory.
Despite these seemingly bullish indicators, an analysis of liquidity cluster data suggests a potential "bull trap" might be forming for ADA. A bull trap occurs when a security's declining trend reverses after a convincing rally, only to swiftly reverse again, "trapping" buyers who acted on the false upward signal.
A closer examination of the 24-hour Liquidation Heatmap reveals limited liquidity above ADA's current price, with clusters only extending up to $0.78. In stark contrast, a substantial concentration of unfilled liquidity lies below, stretching down to $0.68.Given that ADA is currently trading in a bullish phase at $0.75, it appears likely to first reach for the $0.78 liquidity cluster. However, the proximity of the current price to this upper cluster (just $0.03 below) combined with the larger liquidity pool beneath suggests a potential sharp reversal. If this scenario plays out, it could trigger a classic bull trap, leading to liquidations for long traders who entered positions expecting a sustained rally.
Traders are advised to exercise caution and consider the potential for a swift reversal, especially given the distinct imbalance in liquidity clusters.
July 2025, Cryptoniteuae