On-chain analytics firm Santiment has revealed that Cardano (ADA) is one of the altcoins that could likely see price surges soon.
Cardano Among Altcoins Being Heavily Sold Right Now
In a new publish In X, Santiment talked about altcoins being shorted in the derivatives market. The relevant indicator here is the “Financing rate”, which monitors the periodic rate that derivatives traders have to exchange with each other.
When the value of this metric is positive, it means that long contract holders are currently paying a premium to short investors to maintain their positions. Therefore, this type of trend implies the presence of a majority bullish sentiment in the market.
On the other hand, the negative indicator suggests that short position holders outnumber long position holders at the moment and as such, a bearish mindset is prevalent in the sector.
In the current thread, Santiment referred to the Funding Rate specifically for cryptocurrency exchanges Binancewhich is the largest platform in terms of trading volume and should therefore represent the trend on other major exchanges.
Here is the chart shared by the analytics firm that shows the trend of this indicator for three altcoins over the past few months:
As visible in the chart above, all three of Cardano, Chiliz (CHZ), and Fantom (FTM) have seen their Binance funding rate remain within the negative territory for the past five weeks, implying that investors have been continuously betting against a bullish outcome for them.
Historically, such aggressive selling against any asset has positively impacted its price. This is because liquidation pressure is more likely to affect the dominant side of the market at this point.
A “liquidation squeeze“It is an event in which a sudden change in price liquidates a large number of contracts at once. These liquidations feed back into the movement that caused them, amplifying it and starting a cascade of new liquidations.
The chart shows that these three altcoins also saw a similar level of short selling at the beginning of the year. What followed this bearish sentiment was a surge in their prices. Cardano saw a 10% increase, Chiliz 32%, and Fantom 49%.
So, following this trend, it is possible that short liquidations will occur once again for these altcoins and lead to a rise in their prices.
ADA Price
Cardano had previously surpassed the $0.45 mark, but the asset appears to have plummeted since then as its price is now trading around $0.39.