Cardano’s Funding Rates Hit Yearly Low – What Next for ADA?


  • ADA drops 24%, hitting a two-month low amid massive market sell-offs.
  • Funding rates for ADA fall to -49%, signaling bearish sentiment and potential for a short squeeze.
  • Cardano’s Total Value Locked drops, but increased DeFi activity could signal a potential rally.

On February 3rd, Cardano’s ADA suffered a sharp 24% drop, falling to $0.67. This price drop came as part of a larger market downturn, which saw the overall cryptocurrency market capitalization drop by 10%. Over $31 million in ADA long positions were liquidated, marking the second-highest liquidation level in a year. The resulting surge in selling pressure sent Cardano’s funding rates to their lowest level in twelve months. Can ADA recover, or will the decline continue?

Major Sell-off Causes Market Shift

Cardano’s funding rates dropped dramatically, reaching -49%. This suggests traders are betting on further price declines. The shift shows how much bearish sentiment has taken over the market. The drastic drop in funding rates could trigger a short squeeze if the trend reverses unexpectedly. For now, however, ADA faces serious downward pressure as more traders exit long positions.

The liquidation of $31 million worth of ADA long positions further fueled the sell-off. Forced closures put additional selling pressure on the market, pushing prices down even more. This caused a shift in Cardano’s derivative market, further reinforcing the bearish trend.

Can Cardano Bounce Back from Two-Month Low?

Cardano now trades at a two-month low. ADA’s price dropped to $0.67 after $736 million worth of selling volume. Sellers seem to be tiring, though. The Relative Strength Index has fallen to a level of 25, indicating oversold conditions. The oversold nature of ADA may suggest the selling pressure could soon ease.

ADA also dipped below the lower Bollinger band, another sign of oversold conditions. If traders start buying the dip, ADA could see a price reversal. However, to confirm a bullish trend, ADA must break resistance at $0.84. A drop below $0.31 could trigger further declines.

Cardano’s Total Value Locked (TVL) has fallen to $312 million, reflecting reduced DeFi activity. This decline adds to the bearish pressure. However, a sudden increase in DeFi activity could signal a potential rally. Traders will need to keep a close watch for any signs of a shift in momentum.





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