- ADA’s funding rate at -49% indicates extreme bearish sentiment, but potential short squeezes could fuel sudden price rebounds.
- RSI at 27.95 indicates oversold conditions, yet the MACD trend remains bearish, suggesting further downside risk.
- ADA must hold $0.72 support to attempt recovery toward $0.80-$0.85; failure could see a drop to $0.65-$0.70.
Cardano (ADA) had sharp volatility on February 4, trading at $0.7303 after a 4.32% surge in the last 24 hours. However, it remains down by 23.55% over the past week and 32.03% over the last month.
ADA’s Market cap has increased to $25.76 billion, a 4.55% gain. Despite the short term recovery, ADA remains under strong selling pressure as funding rates drop to their lowest level in over a year.
Funding Rates Drop to Record Lows
Funding rates indicate the balance between long and short positions in the futures market. A negative funding rate, such as ADA’s current -49%, suggests a dominance of short positions over long positions.
This decline indicates a bearish sentiment among traders, with expectations of further price drops. If the market is overly shorted, a sudden price reversal could lead to a short squeeze, causing short traders to buy back at higher prices.
Technical Indicators Show Bearish Momentum
ADA’s price shows continued bearish pressure. The daily range traded between a high of $0.8198 and a low of $0.7150.
Source: TradingView
Selling pressure has increased after breaking below the key $0.80 support level. The previous uptrend from November to January saw ADA peak at $1.40, but the recent downturn has reversed those gains.
The RSI is at 27.95, in oversold level, indicating ADA is undervalued. RSI levels below 30 indicate potential for short term rebounds or consolidation. However, the RSI signal line remains in a downtrend at 42.42, confirming that selling pressure is dominant.
The MACD also indicates a bearish trend. The MACD line at -0.0477 is below the signal line at -0.0254, with a widening negative histogram of -0.0223. This suggests increasing downside momentum, with no immediate signs of a reversal.
Key Levels and Analyst Predictions
ADA is testing support between $0.70 and $0.72. A breakdown below this zone could push prices toward $0.65 or even $0.60. If buying pressure increases, ADA may attempt a recovery toward $0.80-$0.85, but resistance at $0.82 is a barrier.
According to Dan Gambardello, Cardano has bounced by 62% in less than 1 day. He suggests that 2025 is going to be fun for $ADA holders. This shows the extreme volatility in ADA’s price movements, with sudden recoveries following steep declines.
If ADA remains above $0.72, it could attempt to reclaim $0.80-$0.85. However, if bearish momentum persists, a fall toward $0.65-$0.70 remains possible. With volatile market sentiments, monitoring support and resistance levels is essential to predict potential price shifts.