Cardano (ADA) is one of the altcoins that could see a price boost soon, according to on-chain analytics firm Santiment. Santiment recently discussed the altcoins that are being heavily shorted on the derivatives market, using the “Funding Rate” as an indicator of market sentiment.
When the Funding Rate is positive, it means that long contract holders are paying a premium to short investors, indicating a bullish sentiment. Conversely, a negative Funding Rate suggests a bearish mentality in the market. Santiment specifically referred to Binance’s Funding Rate for Cardano, Chiliz (CHZ), and Fantom (FTM), showing that all three coins have had a negative Funding Rate for the past five weeks.
Historically, aggressive shorting against an asset has led to price increases due to a liquidation squeeze. A liquidation squeeze occurs when a sharp price move liquidates a large number of contracts, leading to further liquidations and price amplification. Earlier in the year, Cardano, Chiliz, and Fantom experienced a surge in price following a period of heavy shorting.
Currently, Cardano is trading around $0.39 after breaking past the $0.45 mark. The recent price drop may indicate a buying opportunity for investors looking to capitalize on a potential price rally.
In conclusion, Santiment’s analysis suggests that Cardano and other altcoins could see price boosts in the near future due to heavy shorting on the derivatives market. Investors should conduct their own research and consider the risks before making any investment decisions in the volatile cryptocurrency market. It will be interesting to see how these trends play out in the coming weeks.