Santiment is an analytics company that specializes in on-chain data. They have revealed Cardano, or ADA as one of the altcoins likely to see a price increase soon.
Cardano Is Among Altcoins Being Shorted Heavily Right Now
The new post Santiment talked on X about altcoins that are being shorted on the derivatives markets. This is the indicator that matters. “Funding Rate,”The system keeps track the fee exchanged between derivatives traders.
This metric’s value being positive means that the long-term contract holders pay a premium for the short-term investors to maintain their positions. A positive trend in this area indicates that the majority of investors are bullish.
A bearish mindset is prevalent in the industry, as the indicator shows that short-term holders are outnumbering long-term ones.
Santiment referred specifically to the Cryptocurrency Exchange Funding Rate in this topic. BinanceThe largest trading platform in terms of volume should represent trends on all other major exchanges.
This chart, shared by an analytics company, shows the trends in the indicator of three alternative coins over the last few months.
In the graph above, it is clear that Binance’s Funding Rate for all three cryptocurrencies, Cardano, Chiliz, and Fantom, has been negative for five consecutive weeks. It means investors continue to bet against them.
In the past, aggressive shorting of any asset had a positive impact on its price. A liquidation squeeze would be more likely to impact the dominant side in the current market.
You can also find out more about the A-Team here. “liquidation squeeze”, is an occurrence whereby a sudden change in price can result in the liquidation of a number of contracts. They are a reaction to the initial move, amplifying and initiating a series of liquidations.
This chart shows the same three altcoins were also shorted at a similar rate earlier this year. Following this negative sentiment, their prices soared. Cardano prices rose 10%, Chiliz prices rose 32%, Fantom’s 49%.
Thus, going by this trend, it’s possible that short liquidations could once again happen for these altcoins and lead to a rally in their prices.
ADA Price
Cardano was trading at $0.39 when it broke the $45 barrier earlier.
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Source: www.newsbtc.com