Can Cardano (ADA) recover after SecondFi Wallet exploit?

Cardano ADA remains under pressure after a sharp sell-off over the past month, but several technical indicators suggest the pace of the decline may be slowing.

The Cardano price was trading at $0.1445 at the time of writing, down 1.3% over the previous 24 hours and 10.8% over the last seven days.

The token has lost 38.6% over the past month and remains more than 95% below its all-time high of $3.09, which was recorded in September 2021.

Notably, the most recent decline follows the impact of the recent SecondFi wallet exploit, an incident that exposed vulnerabilities in wallet software rather than the Cardano blockchain itself.

Although the broader trend remains bearish, momentum indicators are beginning to paint a different picture.

With the Relative Strength Index (RSI) moving into oversold territory, focus has now shifted to whether Cardano can stabilise and even recover.

SecondFi exploit and the recovery plan

Investor sentiment took a hit after the SecondFi wallet exploit resulted in the theft of approximately 16 million ADA, valued at roughly $2.4 million at the time of the attack.

Following a forensic investigation, SecondFi said it identified the root cause of the incident as a deterministic nonce derivation flaw within its wallet signing implementation.

According to the company's findings, the vulnerability allowed attackers to reconstruct private keys using publicly available blockchain data, leading to the compromise of affected wallets.

The attack unfolded in three automated waves, with two distinct threat actors directly draining 16 million ADA from 374 wallet addresses.

However, forensics show the total footprint of vulnerable accounts actually reached 3,072.

To prevent further theft, SecondFi executed a rapid emergency containment sweep during the fourth wave, successfully rescuing and isolating roughly 129 million ADA in a secure third-party custodian vault before hackers could exploit the remaining addresses.

SecondFi has since outlined a recovery roadmap, completing a final balance snapshot on June 26 and expecting to spend about one week building its recovery mechanism before conducting another week of security testing.

If those tests are completed successfully, reimbursements to affected users are expected to begin roughly two weeks after the snapshot.

The incident also prompted fresh security guidance for users.

SecondFi advised affected customers not to sign transactions from compromised addresses and instead create entirely new wallets with fresh recovery phrases while waiting for official recovery instructions.

Importantly, the exploit targeted wallet software rather than the Cardano network itself.

The issue stemmed from cryptographic implementation inside the wallet, not from a weakness in Cardano's blockchain protocol.

RSI oversold as ADA approaches key support

While the SecondFi exploit created additional uncertainty, price action suggests traders are increasingly focused on technical levels.

Across most technical indicators, technical analysis currently shows a bearish short-term bias.

Cardano (ADA) is trading below its 10-day, 20-day, 50-day, 100-day and 200-day exponential moving averages (EMAs), a sign that the broader trend is still pointing lower.

Momentum indicators, however, tell a more balanced story.

The 14-day RSI stands at 30.26 coming from 28.28, placing ADA just above oversold territory.

But on the weekly timeframe, the RSI is 28.14, deep into the oversold region.

These RSI readings indicate that selling pressure has become stretched, although they do not confirm that a trend reversal has already begun.

The Moving Average Convergence Divergence (MACD) has begun turning positive, suggesting bearish momentum is fading even as price remains below major resistance levels.

Meanwhile, derivatives positioning continues to reflect cautious sentiment.

The long-to-short ratio is approximately 0.72, indicating that short positions still outnumber long positions.

Funding rates have also remained slightly negative, showing that bearish traders continue to dominate perpetual futures markets.

Despite that, on-chain data has shown increased activity from larger investors, with sizeable spot-market purchases suggesting that some whales have been accumulating ADA during the recent decline.

The Cardano price is approaching an important technical zone.

The immediate support level sits at $0.1387, close to the recent 24-hour low of $0.1418. A decisive move below that support could expose ADA to additional downside.

On the upside, the first major resistance stands at $0.1739.

A daily close above that level would strengthen the case for a broader recovery and could shift attention toward the next resistance at $0.1895.

Those levels broadly align with the recent trading range, where ADA has fluctuated between $0.1397 and $0.1627 over the past week.