ADA and XRP Experience Significant Shorting Activity Amid Market Downturn
In the midst of the ongoing market downturn, both Cardano (ADA) and Ripple’s XRP have seen a surge in short positions, mirroring the bearish trend of Bitcoin (BTC), which has dropped below a crucial support level at $64k. Over the past 24 hours, ADA has declined by 2.4% and is currently trading at $0.38, while XRP has declined by 1.4% and is trading at $0.49.
Despite the market situation, ADA and XRP have become notable altcoins attracting heavy shorting activity, as previously reported by Crypto News Flash. However, analysts believe that the liquidation of these short positions could serve as a catalyst for significant price increases.
Cardano and XRP are among the altcoins that have seen substantial shorting activity following relief bounces. This is seen as a positive sign for patient bulls, as the liquidation of short positions can effectively fuel continued price rises.
A review of the Cardano price chart reveals that the Binance Funding Rate is currently at -0.013743, indicating the dominance of short positions. This position is further confirmed by derivatives data from Coinglass, which reports a long/short ratio for ADA of 0.9755. Interestingly, the Binance long/short ratio for accounts shows a reading of 2.51, despite the significant increase in short positions.
The situation is similar for XRP, with the Binance Funding Rate standing at -0.002935, indicating a predominance of short positions. Coinglass data confirms this position, reporting a long/short ratio for XRP of 0.9623. However, the Binance long/short ratio for accounts shows a reading of 2.98, suggesting that more traders on the platform are optimistic about an upsurge.
Analysts explain that the increasing shorting activity could potentially lead to a bullish run, as upward movements often trigger short covering. This, in turn, could result in a sudden and substantial price increase as shorts buy back the asset to cover their positions. This bullish outlook is supported by a previous analysis of ADA’s and XRP’s 30-day Market Value to Realized Value (MVRV) ratios.
According to Santiment, the 30-day MVRV of XRP is at -3.5, indicating a mildly bullish sentiment. The 30-day MVRV of ADA is even lower at -12.6, also signaling a bullish outlook. This aligns with the analysis by crypto analyst Alan Santana, who suggests that all assets have 8-10 months to experience a significant surge after their previous peak.
Santana points out that XRP’s last peak was in July 2023, when it responded strongly to Judge Analisa Torres’ ruling. Since then, XRP has gone without a bullish wave for about 11 months. However, Santana remains optimistic about the future, predicting a 100% move for XRP in the near future.
In conclusion, while ADA and XRP are currently experiencing heavy shorting activity, analysts believe that this could potentially lead to a bullish reversal. The liquidation of short positions could serve as a catalyst for significant price increases, as seen in previous market trends.