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Cardano price tests historic support hinting at reversal

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Cardano price tests historic 2022 support as oversold conditions hint at reversal - 1

Cardano price has returned to a major historical support zone near $0.28 as RSI plunges into extreme oversold territory.

Summary

  • $0.28 aligns with 2022 and 2023 historical support
  • RSI in extreme oversold conditions
  • Holding support opens bounce toward range midpoint

Cardano (ADA) is once again testing a long-term demand zone that previously acted as a structural bottom during the 2022 bear market. The same region later served as a foundation for the 2023 cycle low, reinforcing its significance as a high timeframe support area.

Cardano price key technical points

  • Major Support: $0.28 aligns with the historical 2022 and 2023 demand zone.
  • Oversold Signal: RSI in extreme oversold territory.
  • Range Structure: Price remains within a broader high timeframe trading range.
Cardano price tests historic 2022 support as oversold conditions hint at reversal - 1
ADAUSDT (1W) Chart, Source: TradingView

Cardano’s current price action reflects heightened selling pressure, but it is unfolding at a technically important location. The $0.28 region represents both the value area low and the broader range low within the current high timeframe structure. Historically, this level provided a strong base during the 2022 downturn and later marked the 2023 cycle bottom, establishing it as a critical liquidity zone.

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Momentum indicators further strengthen the case for a potential reversal. The Relative Strength Index (RSI) has entered extreme oversold territory, signaling that selling pressure may be approaching exhaustion. While oversold conditions alone do not guarantee an immediate rebound, they often precede periods of relief rallies, particularly when aligned with significant structural support.

From a market structure perspective, Cardano continues to trade within a larger consolidation range rather than a confirmed breakdown trend. As long as price remains above the $0.28 range support, the probability favors continuation within this established structure.

Markets frequently rotate between range extremes before deciding on longer-term direction, and the current setup mirrors previous historical rotations, even as Cardano price remains under pressure despite the Midnight Foundation unveiling major blue-chip companies as node operators.

If support holds and RSI begins to recover through a bullish crossover, the first upside target would likely be the range midpoint, followed by the upper boundary of the trading range. Previous cycles have demonstrated that once oversold momentum unwinds, Cardano can produce sharp relief rallies toward equilibrium zones.

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However, traders should remain cautious. A confirmed breakdown below the historical support would invalidate the bullish reversal thesis and expose deeper downside levels. For now, the technical evidence leans toward a potential bounce scenario, given the confluence of oversold momentum and long-standing demand.

Volume dynamics will be critical in determining the strength of any recovery. A rise in buying participation near $0.28 would confirm accumulation behavior, while continued weak demand could delay reversal attempts.

Overall, Cardano finds itself at a decisive inflection point. The combination of historical support and extreme oversold readings creates conditions favorable for a relief rally, but confirmation depends on whether buyers can defend the range low.

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What to expect in the coming price action

As long as Cardano holds above the $0.28 range support, the probability favors a short-term rebound toward the range midpoint and potentially the range high. A breakdown below this level would shift structure bearish and increase downside risk, but current oversold conditions suggest a bounce remains likely in the near term.

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Crypto World

Aave’s TVL Falls $8B After $293M Kelp DAO Hack

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Aave’s TVL Falls $8B After $293M Kelp DAO Hack

Total value locked on decentralized lending protocol Aave dropped by nearly $8 billion over the weekend after hackers behind the $293 million Kelp DAO exploit borrowed funds on Aave, leaving roughly $195 million in “bad debt” on the protocol and triggering withdrawals.

Data from DeFiLlama shows that Aave’s TVL fell from about $26.4 billion to $18.6 billion by Sunday, losing the top spot as the largest DeFi protocol. 

Aave v3’s lending pools for USDt (USDT) and USDC (USDC) are now at 100% utilization, meaning that more than $5.1 billion worth of stablecoins cannot be withdrawn until new liquidity arrives or borrows are repaid. 

$2,540 is available to be withdrawn from the $2.87 billion USDT pool on Aave v3 at the time of writing. Source: Aave

Aave’s TVL fall shows how rapidly risk from a single security incident can spread throughout the broader, interconnected DeFi lending market, potentially leading to a severe liquidity crisis.

The incident began on Saturday when hackers stole 116,500 Kelp DAO Restaked ETH (rsETH) tokens worth about $293 million from Kelp DAO’s LayerZero-powered bridge and used them as collateral on Aave v3 to borrow wrapped Ether (wETH).

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Crypto analytics platform Lookonchain said the move created about $195 million in “bad debt” on Aave, which contributed to the Aave (AAVE) token tanking nearly 20% from $112 on Saturday at 6:00 pm UTC to $89.5 about 25 hours later. 

Lookonchain noted that some of the largest crypto whales to withdraw funds from Aave were the MEXC crypto exchange and Abraxas Capital at $431 million and $392 million, respectively.

Source: Grvt

Several crypto networks and protocols tied to rsETH or the LayerZero bridge have paused use of the bridge until the problem is resolved, including DeFi platform Curve Finance, stablecoin issuer Ethena and BitGo’s Wrapped Bitcoin (WBTC).

Aave has frozen several rsETH, wETH markets

Shortly after the Kelp DAO exploit, Aave said it froze the rsETH markets on both Aave v3 and v4 to prevent any suspicious borrowing and later stated that rsETH on Ethereum mainnet remains fully backed by underlying assets.

WETH reserves also remain frozen on Ethereum, Arbitrum, Base, Mantle and Linea, Aave said.

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This incident marks the first significant stress test of Aave’s “Umbrella” security model, which was introduced in June 2025 to provide automated protection against protocol bad debt while enabling users to earn rewards.

Related: Aave DAO backs V4 mainnet plan in near-unanimous vote

Earlier this month, the Bank of Canada found that Aave avoided bad debt in its v3 market by using overcollateralization, automated liquidations and other strategies that shifted risk to borrowers.

In comments to Cointelegraph, Aave defended its liquidation-based model, framing it as a core safety mechanism that protects lenders while limiting downside for borrowers.

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It comes as Aave parted ways with its longest-standing DeFi risk service provider, Chaos Labs, on April 6, following disagreements over the direction of Aave v4 and budget constraints.

Magazine: Are DeFi devs liable for the illegal activity of others on their platforms?