Cardano: Is ADA setting up a bear trap before a 2021-style breakout?

With historical price trends and key technical indicators aligning, could ADA’s current position be a bear trap before its next explosive breakout?

Looking into ADA’s long-term outlook Derivatives data highlights de-risking, with Open Interest (OI) dropping 11.79% to $734.16 million as $750 million was unwound within two weeks.

Meanwhile, spot market demand stays strong, with withdrawals outpacing inflows and trading volume increasing 12% to $2.01 billion. This suggests sustained buying pressure.

Meanwhile, a 15 million ADA uptick in the Spent Coin Age Band (90-180 days) suggests mid-term holders are moving funds. This could signal early-stage distribution.

Cardano data Source: Santiment

With sell-side liquidity being absorbed, ADA may be setting up for deeper consolidation below $1, as futures unwinding meets steady spot demand.

In the coming days, the market will reveal whether this consolidation phase persists. If it holds, a bear trap could emerge, potentially triggering short-seller liquidations as market conditions shift. This could pave the way for a rally reminiscent of 2021.