The recent surge in the daily price of XRP and ADA has been driven by a rise in short positions, sparking both market confidence and concerns about potential volatility.
Cardano (ADA) experienced a rapid increase of over 4% before reversing back into the “red zone” to settle at $0.39, while XRP saw a 3% jump within 24 hours to reach $0.49.
According to insights from the crypto market intelligence platform Santiment, the sudden rally was triggered by a wave of newly opened short positions. Traders seemed unconvinced by the relief rally following the US Securities and Exchange Commission’s decision to drop the security probe into Ethereum. This resulted in the highest shorting vs longing ratio for ADA in nine months and XRP’s bearish to bullish ratio hitting a one-month high.
The heavy shorting exerted downward pressure on both ADA and XRP, pushing them into the “red zone” on Wednesday night. Despite this, Santiment views this as a positive sign for bullish traders, anticipating potential liquidations and a short squeeze if the market turns against these positions. Conversely, the exit of short sellers through buy orders could drive prices up.
Cardano and XRP stand out as altcoins attracting significant shorting activity post-relief bounces, which could fuel further price increases for patient bulls.
CryptoQuant’s report on XRP and ADA revealed a surge in Open Interest for XRP, indicating growing market confidence and heightened trading activity. However, this could also lead to market volatility despite the bullish sentiment and potential price appreciation.
While Open Interest for ADA has been steadily increasing since May 2024, crowd sentiment has notably declined for Cardano, Shiba Inu, and Dogecoin following their respective price drops. This presents a buying opportunity for patient traders waiting for the crowd sentiment to hit a low.
In addition to market data, Cardano’s Charles Hoskinson shared plans for the blockchain governance, including the introduction of decentralized representatives (dReps) within 90 days post-Chang hard fork. This development coincides with reports of the upcoming transfer of Cardano’s treasury to the community, valued at nearly $681.9 million.
Ripple continues its legal battle against the SEC, with a favorable outcome expected to have a significant impact on its price.
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