Cardano (ADA) derivatives traders are confident that the altcoin’s price will soon recover most of its recent losses, according to data obtained by BeInCrypto from Coinglass.
ADA, like many cryptocurrencies, has struggled in recent days, currently trading at a seven-day low of $0.35. Despite the bleak market conditions, these traders appear unfazed. The question remains: will their optimism prove to be the right decision?
Cardano Recovery Confidence Reaches Extreme Highs
According to derivatives information portal Coinglass, the 4-hour Long/Short ratio for Cardano (ADA) is currently 2.91. The Long/Short ratio measures the buying volume (longs) relative to the selling volume (shorts) of futures contracts.
This ratio provides insight into the market sentiment among traders. A ratio below 1 indicates bearish sentiment, while a value above 1 suggests that more traders are taking long positions in anticipation of higher prices.
For Cardano, the current ratio indicates that nearly 75% of traders holding ADA-related contracts expect a price rebound, while only 25% expect another decline. This strong bias toward long positions reflects traders’ optimism that ADA will recover from its recent decline.
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However, it is not only derivatives traders who are optimistic about a potential ADA recovery. On-chain data from IntoTheBlock shows that ADA holders are also confident that the altcoin will recover its losses.
To provide context, BeInCrypto looks at coin holding time, a metric that tracks how long a cryptocurrency has been held without being sold or transacted. When this metric decreases, it indicates that holders are selling.
In the case of ADA, coin holding time has increased by 64% over the last seven days and an impressive 103% over the last 30 days. This increase suggests that holders are maintaining their positions, which could help stabilize the ADA price and prevent another downturn – barring any unforeseen negative events in the market.
ADA Price Forecast: Bulls Need to Protect Key Support
While Cardano’s price has fallen 15% since Saturday, the moving average convergence divergence (MACD) indicator suggests relief may be on the horizon. MACD is a technical oscillator that helps traders identify buying and selling trends and gauge momentum.
A negative MACD reading indicates bearish momentum, while a positive reading indicates bullish momentum. In Cardano’s case, a positive MACD reading, despite the recent price decline, suggests a bullish divergence. If this divergence continues, it could precede a price rally.
However, there are important levels to watch. For ADA to confirm the bullish outlook, it needs to hold above $0.34. If it fails to do so, a deeper correction to $0.31 could occur. On the other hand, if the bulls defend the $0.34 area, ADA could begin an upward move towards $0.39 in the short term.
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Meanwhile, a significant price decline could trigger massive long liquidations and potentially trigger a long squeeze. For those unfamiliar, a long squeeze occurs when traders expecting prices to rise are forced to sell to prevent further losses.
