Cardano (ADA) has suffered a critical technical setback this February 26 after failing its bullish breakout attempt. According to on-chain data reported by Santiment, despite a visible capital inflow of $340 million, hidden selling pressure from mega-whales neutralized the momentum, invalidating the recovery toward $0.41.
The digital asset attempted to overcome the $0.31 resistance supported by an inverse head-and-shoulders pattern, a structure that technically projected a 38% rally. However, the formation of an extensive upper wick on the daily chart confirmed that supply exceeded demand, generating a false breakout that has left thousands of retail traders trapped in long positions.
Institutional imbalance nullifies the technical buy signal
Deep analysis of capital flows reveals an alarming divergence between different investor cohorts. While mid-sized whales (100M-1B ADA) accumulated aggressively, addresses holding over 1 billion ADA liquidated positions massively, creating a net selling imbalance of approximately $980 million. This behavior suggests a strategic distribution by “smart money” taking advantage of incoming liquidity.
Contrasting this movement with the previous cycle, a worrying pattern of fractal repeatability emerges. During the first quarter of 2025, Cardano exhibited an almost identical price structure: a failed relief rally followed by a bearish divergence on the RSI, which preceded a 22% correction in the subsequent weeks. The current correlation with that period suggests that whales are executing a “sell into strength” cycle, utilizing peaks of optimism in cryptocurrencies to reduce exposure before a new, lower accumulation phase.
Adding to this historical scenario is a high-risk technical signal: the hidden bearish divergence on the RSI. Although the price formed lower highs between January and February, the relative strength indicator marked new highs. This disconnect signals latent structural weakness, indicating that the recent rally lacked real organic volume and was sustained merely by derivatives speculation.
Can the $0.25 support prevent a drop to $0.22?
The risk of a severe correction is magnified when observing the futures market. Liquidation data from Coinglass show that there are $11.40 million in long positions exposed below the current price, compared to just $5.67 million in shorts. This excess of bullish leverage acts as fuel for a possible “long squeeze,” where forced selling accelerates the drop.
The integrity of the trend now depends on the bulls’ ability to defend the $0.27 zone. If Cardano loses this level, the probability of a cascading liquidation increases exponentially, pushing the price toward the critical support of $0.25. A break of this floor would completely invalidate the bullish thesis, opening the door to a drop toward $0.22.
For the coming sessions, investors must strictly monitor daily candle closes. Reclaiming the $0.30 level is the only scenario that would invalidate the current trap; however, given the hidden institutional selling volume and the negative historical correlation, the most likely scenario points to a bearish continuation or consolidation until the excess floating supply is absorbed.
