ADA and XRP Experience Significant Shorting Activity Amid Market Downturn
The ongoing market downturn has led to a surge in shorting activity for Cardano (ADA) and Ripple’s XRP. Analysts believe that this could be a potential catalyst for a bullish reversal in the near future.
Both ADA and XRP have followed Bitcoin’s bearish direction as it broke a crucial support level and traded below $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.
According to Crypto News Flash, ADA and XRP have been experiencing heavy shorting activity during this market situation. However, Santiment, a market analytics firm, suggests that the liquidation of these short positions could lead to significant price increases.
The heavy shorting activity for Cardano and XRP is seen as a positive sign for patient bulls, as the liquidation of shorts can act as “rocket fuel” for continued price rises.
An analysis of the Cardano price chart reveals a Binance Funding Rate of -0.013743, indicating the dominance of short positions. Coinglass derivatives data further supports this, reporting a long/short ratio for ADA of 0.9755. Interestingly, the Binance long/short ratio for accounts indicates a reading of 2.51, despite the increase in short positions.
A similar pattern is observed for XRP, with a Binance Funding Rate of -0.002935, indicating a predominance of short positions. Coinglass data confirms this, showing a long/short ratio for XRP of 0.9623. However, Binance’s long/short ratio for accounts reveals a reading of 2.98, suggesting that more traders on the platform are optimistic about an upsurge.
Santiment explains that the increasing shorting activity could lead to a bullish run, as upward movements often trigger short covering. This 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 previous analysis of ADA’s and XRP’s 30-day Market Value to Realized Value (MVRV) ratios.
Santiment reports that the 30-day MVRV of XRP is at -3.5, indicating a mildly bullish sentiment. Similarly, the 30-day MVRV of ADA is even lower at -12.6, also suggesting a bullish outlook. This aligns with the analysis by crypto analyst Alan Santana, who believes that all assets have 8-10 months to experience significant growth after their previous peak.
Santana points out that the last peak for XRP was in July 2023, and since then, it has not seen a significant bullish wave for about 11 months. However, he remains optimistic about the future, predicting a 100% price increase for XRP.
In conclusion, despite the ongoing market downturn, the heavy shorting activity for ADA and XRP could potentially lead to a bullish reversal. Analysts and market data suggest that these altcoins have the potential for significant price increases in the near future.