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Cardano Faces Neutral-Bearish Sentiment as Most Traders Are Shorting ADA
Cardano ADA) finds itself at a crossroads as mixed market sentiment and on-chain metrics indicate a cautious outlook. While ADA recently faced a substantial price decline, losing nearly 20% of its value, the cryptocurrency still shows potential for a 20% upside rally.
With the U.S. presidential election approaching, market participants are weighing the prospects of a possible price rebound.
Technical Analysis: ADA’s Crucial Support and Bullish Potential
According to recent technical analysis, Cardano currently sits at a crucial support level of $0.340, a price zone that has previously triggered upward momentum. Historically, ADA’s visits to this level have led to buying pressure and subsequent rallies of over 20%, pushing prices to the $0.40 mark.
Since July 2024, this pattern has been repeated many times, reinforcing the significance of this support zone.
Traders and investors are closely monitoring ADA’s price movement, anticipating a similar upside rally. However, the timing and magnitude of this potential rise may depend on broader market conditions and investor sentiment, which remains somewhat bearish.
On-Chain Metrics: Bearish Sentiment and Liquidation Risks
Despite the technical bullish outlook, on-chain metrics tell a different story. Long/Short ratio for ADA reflects a neutral-bearish sentiment among traders.
Additionally, ADA’s open interest (OI) continues to remain little, moving with low volumes in both buying and selling, suggesting potential sideways.
Current Market Situation and Investor Participation
At the time of writing, ADA is trading around $0.36, with no significant price changes over the past few days. During this period, ADA’s trading volume has dropped by 50%, indicating reduced participation from traders and investors.
This decline in trading activity suggests a wait-and-see approach as the market digests recent price movements and macroeconomic events.
Outlook: Will ADA Stage a Comeback?
While Cardano’s historical price action and technical analysis suggest the potential for a rebound, neutral-bearish sentiment and on-chain data indicate a challenging path ahead. With traders holding a larger percentage of neutral-short positions and open interest declining, ADA’s price trajectory remains uncertain.
If ADA manages to break through key resistance levels and overcome bearish pressure, a rally back to $0.40 is plausible. However, a sustained upside would likely require improved market sentiment and renewed buying interest.
As the U.S. presidential election draws near, the market’s overall mood and external factors will play a crucial role in shaping ADA’s future. Investors and traders should remain vigilant, balancing optimism with caution in a market marked by heightened volatility.