- Altcoin investors should be vigilant about the cryptocurrencies traders are heavily shorting, especially when significant exchange funding rates drop below zero.
- Currently, Cardano (ADA), Chiliz (CHZ), and Fantom (FTM) are experiencing these negative funding rates, heightening the risk of liquidations.
- Such liquidations could potentially serve as a catalyst for price surges in these cryptocurrencies.
Discover the altcoin market dynamics with insight into Cardano, Chiliz, and Fantom, as significant negative funding rates set the stage for potential price volatility.
Cardano’s Struggle with Sustained Upward Momentum
Cardano (ADA) has been facing challenges in maintaining its upward trajectory. The cryptocurrency is currently trading around $0.3970 and is grappling to stay above critical support levels marked by the 50 EMA (blue), 100 EMA (orange), and 200 EMA (black). The failure to break above the 200 EMA suggests a possible bearish trend, raising investor concerns.
On-Chain Metrics and Market Dynamics
According to recent on-chain data, 69% of ADA addresses are currently unprofitable, while only 25% are in profit. This substantial imbalance indicates that a significant number of traders might opt to liquidate their positions if prices don’t improve, potentially causing a wave of liquidations. Over the past five weeks, ADA funding rates on Binance have remained negative, adding to the selling pressure. Historical trends show that such conditions often lead to short squeezes, where forced short position covers drive up the price rapidly.
Conclusion
In summary, Cardano’s current market behavior reflects a critical juncture for investors. The persistence of negative funding rates and substantial trader imbalance points to a potential for significant price movement triggered by liquidations. Investors and traders should monitor these signals closely, as they could offer cues for strategic positioning in the volatile altcoin market.
