- Cardano financing rates fell at -49%, marking the lowest level in more than a year.
- This drop showed a high demand for short positions as the lowering feeling increased.
The cryptocurrency market recorded massive losses on February 3, total market capitalization lowering 10% within 24 hours.
Cardano (ADA) was among the biggest losers after falling 24% to negotiate $ 0.67 at the time of the press.
The drop in Altcoin saw more than $ 31 million in ADA long positions. This marked the second highest level of long liquidations in one year.
As these positions were closed with force, this caused an increase in the sales activity which exerted a lower pressure more downwards on the price.
This long pressure also caused a change on the Cardano derivative market, as shown by the drastic drop in funding rates.
Financing rates have reached an annual hollow
Cardano’s financing rates have recorded a sharp drop in the last 24 hours and reached the lowest level in one year.
At the time of the press, this metric was -49%, indicating a high demand for short positions and reduced bets that ADA will win.
Source: Coringlass
A sharp drop in funding rates shows that traders have become downed over on Altcoin because they planned new decreases. However, such a steep drop could cause short potential pressure if the trend is reversed unexpectedly.
Can Cardano bounce back from a two-month hollow?
Cardano’s 24 -hour drop has led to the lower price at its lowest level in almost three months. The sellers were behind this slowdown, as seen in the $ 736 million in volumes.
However, sellers could be about to reach exhaustion following a drop in the relative resistance index (RSI) at a level of occurrence of 25.
ADA also plunged under the lower Bollinger strip with high volumes, which also points to occurrence conditions.
Source: tradingView
If merchants are starting to buy the current decline, this could trigger a trend reversal. However, for a bullish trend to be confirmed, ADA must return the resistance to $ 0.84.
On the other hand, a fall below the level of support of $ 0.31 could cause other drops.
Read the Cardano Prize forecast (ADA) 2025-2026
A reduced challenge activity could fuel the downward trend
Defillama data has shown a significant drop in activity on the Cardano network. At the time of the press, the total locked value (TVL) fell to $ 312 million, marking the lowest level since early November.
This downward activity could feed the downward trend of Cardano. However, traders must pay attention to an increase in the DEFI activity, as this could coincide with a rally.
