The cryptomarkt started on February with considerable volatility, and Cardano (ADA) cannot escape this. Yesterday the price of ADA fell by no less than 37% to a low point of $ 0.50, after which it recovered to a current rate of around $ 0.75.
This sharp correction was accompanied by a significant fall in the funding rates, which reached their lowest point in more than a year. But what does this mean for the future of Ada?
Funding rates Ada reach the low point
Funding rates are a crucial indicator within the cryptomarket, especially when it comes to the balance between lung and short positions. Simply put, they indicate the costs of maintaining lifting tree positions on the Futuresmarkt. A negative funding speed indicates that there are more short positions (speculations on a fall) than lung positions (speculations on an increase).
Due to the recent correction, the funding rates of Cardano (ADA) have fallen to the lowest level of the past year. This decrease points to a growing bearish sentiment among traders, who expect further price decreases. When financing rates are extremely low, this can sometimes indicate an excessive number of short positions, which increases the chance of a “short squeeze”. This happens when prices rise unexpectedly, forcing short positions to close. As a result, negative funding rates are often short -lived, but they remain an important indicator of the market feeling around a token.
Cardano (Ada) is having a hard time
This week Cardano is one of the hardest hit large cryptocurrencies. The recent correction brought the price back to levels that had not been seen since November. The sharp decrease caused the liquidation of more than $ 31 million in lung positions – the second highest daily liquidation of ADA in the past year.
One of the reasons for this weak achievement is to decline fundamental indicators. The Total Value Locked (TVL) on the Cardano network has fallen to $ 312 million, the lowest point since the beginning of November 2024. Defi activity is often an important indicator of the growth of blockchain networks such as Cardano. A decrease in Defi use may indicate a reduced demand for the Cardano blockchain, which further strengthens the price drop.
Can Ada recover?
To confirm a new bullish trend, Ada has to break around $ 0.84 due to the important resistance levels. If Cardano succeeds in breaking and retaining this level, the price may rise again to the psychological level of $ 1.
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Source: https://newsbit.nl/cardano-ada-onder-druk-koersdaling-en-negatieve-fundingrates/
