Cardano Shows Buy Signal After Recent Hack, But Beware of Bull Trap Risk
June 26, 2026
The recent price action of Cardano (ADA) has garnered attention as the coin reaches a severely low point, sparking discussions about a possible reversal. The Tom Demark (TD) Sequential indicator on the 1-day chart has flashed a buy signal, indicating a potential change in trend for ADA. This signal suggests that Cardano might be primed for a short-term rally, leading to higher prices.
Interestingly, this buy signal comes amidst recent negative sentiment surrounding the Cardano ecosystem. A security breach at SecondFi, a Cardano-based wallet protocol, resulted in a significant loss of ADA coins. Although initial reports estimated the loss at $2.4 million, further analysis suggested a much higher amount of around $20 million. This incident added pressure to an ecosystem already facing governance issues, budgeting concerns, and notable stakeholders considering stepping back.
Despite these challenges, the TD Sequential buy signal points to a possible rebound for ADA. Following three days of consecutive downtrend that saw Cardano drop nearly 10%, the indicator indicates a potential turnaround in the coin’s price. As a result, Cardano has already started to show signs of recovery, with a 6% bounce from its intraday low to its current price.
Moreover, on-chain activity supports the notion of a rebound for Cardano. Data from Santiment indicates an increase in active addresses, reaching 29,025 users who are actively using the network. Additionally, discussions mentioning Cardano on social platforms have surged, with social dominance at 0.33%. While recent events, including the hack and governance issues, have fueled negative sentiments, historically, similar situations have preceded mild price rebounds for ADA.
However, despite these positive signs, the broader market trend remains bearish. While Cardano’s rebound may seem promising, there is a possibility that it could turn out to be a temporary relief rally before another leg down. Key resistance levels to watch closely are in the $0.160 to $0.176 range, representing potential obstacles for ADA’s price recovery. If bears defend this area, it could lead to a bull trap scenario, resulting in continued downward pressure on Cardano’s price.
On the other hand, breaking above these resistance levels could pave the way for Cardano to target its previous lower high at $0.190 from early June. If ADA manages to reclaim and trade above this level while broader market conditions improve, it could signal a more sustainable bottom forming for the coin.
As investors observe the buy signal from the TD Sequential indicator and monitor Cardano’s price action, the future direction of the coin remains uncertain. While there are indications of a potential rebound, market conditions and key resistance levels will play a crucial role in determining whether the recent bullish momentum for Cardano will continue. As always, investors are advised to conduct thorough research and exercise caution when making investment decisions in the volatile cryptocurrency market.
