Is Cardano’s recent parabolic rally just a short-term bear trap? Some clues have emerged to suggest that this might be the case.
In terms of pure price action, ADA’s Q3 rally has put it neck-and-neck with Ethereum in terms of performance, with both altcoins up 71% on a quarterly basis. But while ETH has retreated nearly 2.5% so far in Q4, ADA has continued pushing higher, logging a 5% gain in the same period.
This divergence is interesting, but it also raises the question of whether ADA’s rally is being driven mainly by liquidity. Recent CoinGlass data adds weight to these concerns.
As the chart below demonstrates, Cardano experienced a massive $2 million long liquidation on the 7th of October, its biggest since Q4 2025. This implies that ADA is now seeing an even bigger liquidation cascade than during the October crash.
Another important detail must also be emphasized.
As can be seen in the chart, the long squeeze came after two separate waves of short liquidations, each close to $1 million within just a week.
Technically, this lined up with ADA breaking above the $0.25 resistance, which indicates that the initial upside was indeed fueled by a short squeeze.
However, the picture is completely different now. With a prolonged long squeeze beginning to emerge, the same bullish momentum that fueled ADA higher could twist to the contrary. Naturally, an important question emerges: Is Cardano’s [ADA] recent bullish run losing steam and morphing into a bull trap?
ADA’s accumulation trend could put DOGE’s market cap at risk
Recent Santiment data suggests that ADA’s rally is more than just a short squeeze.
According to the report, ADA gained around 10% from the 3rd to 5th of October, while Open Interest grew nearly 25% to 304 million, its highest daily close since at least early April.
Even measured in ADA, open interest grew by about 13%, pointing to fresh positioning rather than just price-driven growth.
The key takeaway? ADA’s 42% rally from mid-September is attracting big whales back into the market. According to the chart below, the $100k+ ADA transactions hit a peak of 413 on the 5th of October, marking the highest whale activity since the 4th of June.
It can be assumed that short covering contributed to the rally, yet the growing leverage and whale accumulation suggests that “fresh” positions are being opened.
According to AMBCrypto, precisely for this reason, ADA’s recent parabolic upside may not be a bear trap.
So, does this rule out the recent $2 million long squeeze as a potential bull trap? Very much likely. On-chain data suggests that “FOMO” is now playing a bigger role in the rally, with whale accumulation and increased leverage adding fuel to the move.
Moreover, the trend noted above has also attracted the attention of the crowd. ADA’s social dominance hit 1.16%, its highest level of 2026.
Taken together, the signals suggest that Cardano’s recent strategic moves are resonating well with investors, providing ADA with a favorable “long-term” setup.
With ADA’s return above a $10 billion market cap, the current momentum is therefore positioning the altcoin to overtake Dogecoin [DOGE], making a DOGE flip a realistic next target.
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