Cardano Among Altcoins Likely to See Price Surge, Says Santiment

On-chain analytics firm Santiment has revealed that Cardano (ADA) is one of the altcoins that could likely see a price surge soon.

Cardano is one of the altcoins that are heavily shorted right now.

In a new job On X, Santiment talked about altcoins that are shorted in the derivatives market. The relevant indicator here is the “Financing rate”, which keeps track of the periodic fees that derivatives traders must exchange with each other.

When the value of this measure is positive, it means that long contract holders are currently paying a premium to short investors to hold their positions. Therefore, this type of trend implies the presence of a predominantly bullish sentiment in the market.

On the other hand, the negative indicator suggests that short position holders are currently outweighing long position holders and hence a bearish mentality is dominant in the sector.

In the current thread, Santiment referred to the funding rate specifically for cryptocurrency exchange Binancewhich is the largest platform in terms of trading volume and therefore should represent the trend on other major exchanges.

Here is the chart shared by the analytics firm that shows the trend of this indicator for three altcoins over the past few months:

The value of the metric appears to have been negative for these three coins recently | Source: Santiment on X

As seen in the chart above, Cardano, Chiliz (CHZ), and Fantom (FTM) have seen their Binance funding rate remain in negative territory over the past five weeks, implying that investors have continually bet against a bullish outcome for them.

Historically, such aggressive short selling against an asset has had a positive effect on its price. Indeed, a sell-off is more likely to affect the dominant side of the market at the moment.

A “compulsory liquidation” is an event in which a sudden price movement liquidates a large quantity of contracts at once. These liquidations ripple out from the movement that caused them, amplifying it and triggering a cascade of additional liquidations.

The chart shows that these three altcoins had also seen a similar level of shorting earlier in the year. This bearish sentiment was followed by a rise in their prices. Cardano saw a 10% rise, Chiliz 32%, and Fantom 49%.

So, following this trend, it is possible that short liquidations will occur again for these altcoins and lead to a rise in their prices.

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Cardano had crossed the $0.45 mark earlier, but the asset appears to have plunged since then, as its price is now trading around $0.39.

It seems that the price of the coin has dropped in the last few days | Source: ADAUSD on TradingView

Featured image from Shutterstock.com, Santiment.net, chart from TradingView.com

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