Cardano Death Cross Raises Bull Trap Risk as ADA Rally Slows

Cardano is flashing a short-term bearish technical signal as August draws to a close, raising concerns that ADA’s recent recovery could turn into a bull trap.

ADA staged a strong rebound last week after reversing an 11-day decline earlier in August. The Cardano price climbed for four consecutive sessions and reached a high of $0.258 on August 22 before pulling back from that level.

Despite the recovery, Cardano’s hourly chart has now formed a “death cross,” with the 50-period moving average falling below the 200-period moving average. Traders often view this technical pattern as a warning of weakening momentum, although signals on shorter timeframes can be less reliable than those on daily or weekly charts.

The development comes as investors assess whether ADA can maintain its recent gains. Cardano remains up 26.1% in August after gaining 17% in July. At the time of writing, ADA was 0.87% higher over the previous 24 hours and had gained roughly 11% over the past week.

However, weekly gains have moderated as profit-taking spreads across the broader cryptocurrency market following last week’s rally. Changing interest-rate expectations are also creating uncertainty. Traders have increased bets on another Federal Reserve rate hike, potentially reducing support for risk assets such as Bitcoin, Cardano and other cryptocurrencies.

Markets are now focused on Federal Reserve Chair Kevin Warsh’s Jackson Hole keynote on Friday for clues about monetary policy ahead of the Fed’s September 15-16 meeting.

Meanwhile, Cardano received a positive fundamental development from its Leios scaling initiative. According to Cardano developer Input Output, the Earth phase of Leios completed 41 days on a public testnet and significantly increased transaction capacity without altering Cardano’s security model.

During testing, Leios reportedly reached roughly six times the throughput of the current Cardano mainnet. In the final stable testing period, it handled 54% of traffic reaching the chain while processing 18 times more transactions and 3.3 times more data than real mainnet activity.

The combination of improving network performance and bearish short-term technical signals leaves ADA traders watching closely for Cardano’s next major move.