- Cardano’s Funding rates dropped to -49 %, the lowest in over an year.
- As the sentiment towards bears increased, this dip revealed a strong demand for shorting positions.
Market capitalization fell by 10 percent within 24 hours on 3 February.
Cardano [ADA] The stock, which fell by 24 percent to $0.67 as of press time, was one of the worst performers.
ADA positions worth more than $11 million were sold during altcoins’ dip. The second highest amount of long positions liquidated in a year.
The closing of these positions caused a rush in the selling that pushed down further on price.
As can be seen by the dramatic drop in Cardano’s funding rates, this prolonged squeeze has also caused Cardano’s derivative market to shift.
The funding rates have reached a new low for the year
Cardano’s funding rates have fallen dramatically in the past 24 hours, and are now at their lowest levels in a year.
This metric was -49% at the time of press, indicating a high demand for positions on shorts and low bets that ADA would gain.
Coinglass
As traders anticipated more declines, a steep fall in the Funding Rates indicates that they have turned bearish. Such a sharp drop in funding rates could result in a possible short squeeze should the trend unexpectedly reverse.
Can Cardano rebound from its two-month lows?
Cardano’s 24 hour dip led to the lowest Cardano price level for nearly three months. This decline was caused by sellers, as evidenced by the $736M of sales volumes.
Following a drop in the Relative Strength Index to a 25 oversold threshold, it is possible that sellers are close to exhaustion.
ADA also dipped under the Bollinger lower band, with high volume. This also indicates oversold situations.
TradingView
A trend change could occur if traders start to purchase the current dip. ADA still needs to overcome resistance of $0.84 in order to confirm a trend change.
A fall below support of $0.31 may cause more dips.
Click Here to Read Cardano’s [ADA] Price Prediction 2025–2026
Decreased DeFi activities could be fueling the downward trend
The Data of DeFiLlama Cardano activity showed a marked decline. As of the time this article was published, Total Value Locked had fallen to $312M. This is the lowest value since November.
Cardano could be fueled by this declining activity. But traders should be on the lookout for an increase in DeFi, which could also coincide with a rise.
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Source: ambcrypto.com
