Cardano’s recent moves: A ‘pump and dump’ or a setup for a bigger rally?
ADA surged to $1.19 before dropping to $0.73, driven by speculation and liquidation pressures.
- ADA’s seven-day liquidation heatmap pinpointed key areas of liquidation pressure.
- ADA consolidated between $0.94 and $1.00, with a breakout past $1.00 confirming bullish momentum.
Cardano [ADA] recently underwent a rapid pump and dump, with prices surging from $0.65 to $1.19, fueled by speculative hype.
Analysts linked an 80% increase to a political reserve announcement by Trump’s government, which contributed to the rally.
However, heavy profit-taking caused a sharp drop, with liquidation clusters forming at $1.10 for shorts and at $0.73, $0.67, and $0.58 for longs.
Over the past seven days, 36% more positions were longs than shorts, exposing the market to liquidation risks.
ADA’s 1-hour Binance chart revealed a cup and handle pattern. The price dropped to $0.65, formed a rounded bottom, and surged to $1.19, completing the cup.
The handle emerged as ADA consolidated between $0.94 and $1.00, with a breakout past $1.00 confirming bullish momentum. However, a descending trendline from $1.19 to $0.94 guided the subsequent correction to $0.73.
The Crypto Fear & Greed Index hit 25.00, signaling extreme fear, aligning with the dump phase. The RSI, with a 14 SMA of 46.16, hovered near 40.00, reflecting oversold conditions after falling from 60.00.
Similar pump-and-dump cycles in 2021 saw ADA recover post-dip, hinting at a potential rebound. If RSI climbs above 50, ADA could target $1.10.
However, if fear intensifies below 30, prices could dip to $0.58, leading to deeper liquidations.
Assessing ADA’s short and long liquidation levels
ADA’s seven-day liquidation heatmap pinpointed key areas of liquidation pressure. Short liquidations at $1.10 totaled $50M, driven by profit-taking following the $1.19 pump.
Long liquidations concentrated at $0.73 [$40M], $0.67 [$30M], and $0.58 [$20M], showing leveraged positions being liquidated during the dump.
With longs exceeding shorts by 36%, aggressive long positioning amplified the drop. If prices retest $0.73, short covering could drive a bounce.
However, a break below $0.58 could cascade liquidations toward $0.50, mirroring 2022’s sharp corrections.
Gauging ADA’s network participation
Moreover, ADA’s five-year active address chart highlighted past market cycles. In January 2021, active addresses surged 240%, coinciding with ADA’s peak at $3.20.
On the 6th of March 2025, activity showed modest growth, with ADA trading near $0.94, while the 30-day average hovered at 80%.
The 30-day high reached 160%, while the low fell to 0%, reflecting reduced engagement post-dump.
This trend resembled the 2022 bear market, where declining activity preceded a recovery. A sustained increase in active addresses could indicate renewed market interest, potentially pushing ADA back to $1.20.
Conversely, prolonged inactivity below 50% could suppress demand, dragging prices to $0.70.
In conclusion, ADA’s rapid price surge to $1.19, followed by a drop to $0.73, reflected speculative trading and liquidation pressures.
