Well, well, well! Just when you thought you’d seen it all in the wild world of crypto, Cardano‘s Funding Rates take a nosedive to -49%! That’s right, folks, the lowest in over a year! What does this mean for our beloved ADA? Let’s dive in and see if we can make sense of this bewildering situation.
- Cardano’s Funding Rates have dropped to -49%, marking the lowest level in over a year.
- This dip showed a high demand for short positions as the bearish sentiment rose.
The cryptocurrency market took a beating on the 3rd of February, with the total market capitalization plummeting by 10% in just 24 hours. Cardano [ADA] was one of the biggest losers, falling by 24% to trade at $0.67 at the time of writing. This dip led to more than $31 million in ADA long positions being liquidated, marking the second-highest level of long liquidations in a year.
As these positions were unceremoniously closed, it sparked a surge in selling activity that further weighed down on the price. This long squeeze also caused a shift in Cardano’s derivative market, as seen in the drastic drop in funding rates.
Funding Rates hit a yearly low
Cardano’s Funding Rates have taken a tumble in the last 24 hours, reaching the lowest level in one year. At the time of writing, this metric stood at -49%, indicating a high demand for short positions and reduced bets that ADA will rise. A steep decline in Funding Rates suggests that traders have turned bearish on the altcoin, anticipating further declines. However, such a steep drop could lead to a potential short squeeze if the trend reverses unexpectedly.
Can Cardano bounce back from a two-month low?
Cardano’s 24-hour dip has led to the price dropping to its lowest level in nearly three months. Sellers were behind this downturn, as seen in the $736M in selling volumes. However, sellers could be nearing exhaustion following a decline in the Relative Strength Index (RSI) to an oversold level of 25.
ADA has also dipped below the lower Bollinger band with high volumes, indicating oversold conditions. If traders start buying the current dip, it could trigger a trend reversal. However, for a bullish trend to be confirmed, ADA needs to surpass resistance at $0.84.
On the other hand, a fall below the support level of $0.31 could cause further dips. So, ADA holders, hold on to your hats!
Want to know more about Cardano’s [ADA] Price Prediction 2025–2026? Just follow this link and uncover the secrets of the crypto world!
Reduced DeFi activity could fuel the downtrend
Data from DeFiLlama shows a significant decline in activity on the Cardano network. At the time of writing, the Total Value Locked (TVL) had dropped to $312M, marking the lowest level since early November. This declining activity could fuel Cardano’s bearish trend. However, traders should keep an eye out for an uptick in DeFi activity, as that could coincide with a rally.
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2025-02-03 19:06