Cardano Slammed by 899% Liquidation Imbalance, Bear Trap Fears Grow

Cardano is facing an unprecedented liquidation imbalance of 899% after a 9:1 leverage wipeout hit traders, resulting in $585,580 in 24-hour liquidations. The total crypto market saw $159 million in liquidations as investors digested July's inflation print and looked ahead to further readings.

The July CPI for the US increased by 0.1% month over month, matching expectations, leading traders to pare back bets on a Federal Reserve rate hike in September. However, the US producer price index reading due today may yet impact market sentiment.

Cardano's price has been declining since August 7, with a weekly drop of 4.20% and a daily loss of 1.08%. Analyst Ali pointed to a fall in large holders' ADA holdings, suggesting profit-taking after the July price increase. The Tom DeMark Sequential flashed a sell signal on Cardano's daily chart.

While Cardano faces the risk of a deeper correction, momentum indicators remain in the positive zone, sparking speculation about a potential bear trap. A bear trap occurs when traders take short positions based on a falling price, only to be caught off guard by an unexpected upward reversal.