Cardano finds itself struggling near a crucial level as signs of recovery fade in the altcoin market. Despite a bullish buyback, ADA has faced an uphill battle over the last fortnight, struggling to break free from the critical $0.25 threshold. Recent trading sessions have seen heightened selling pressure, leaving investors to question whether the recovery rally was merely a short moment and if a liquidation phase may be on the horizon.
ADA Traders Turn Bearish Amid Declining Open Interest
Cardano (ADA) is hitting a few bumps on its road to recovery. Recently, ADA traders have displayed an increasing bearish sentiment, and one major indicator flashing red is the declining open interest in ADA contracts.
As indicated by the current data on ADA futures open interest, the metric has been on a downward trajectory, hitting levels last witnessed in 2021. At the time of writing, open interest has dropped to $98.6 million, pointing to a decline in trading activity among market participants.
Amid this, the funding rate for Cardano has slipped into negative territory, signaling that traders with short positions are in the driver’s seat and are even prepared to compensate those holding long positions. A negative funding rate is generally a sign of bearish sentiment among traders. At present, the weighted funding rate stands at 0.0063%.
A declining open interest amid a bearish funding rate is often seen as a confirmation of a downtrend, setting off alarm bells among traders. The current scenario suggests that traders are either exiting their positions or are reluctant to open new ones, further fueling the selling sentiment. Also, ADA’s struggle to maintain a price above the $0.25 mark is also feeding into the growing bearish outlook.
What’s Next For ADA Price?
Over the last few hours, ADA price witnessed solid rejection in attempting to surge above the crucial resistance level of $0.25 as bears intensified their selling domination to prevent an immediate surge. However, buyers are defending a decline below the $0.24 level to hold buying sentiment. As of writing, ADA price trades at $0.248, declining over 0.9% from yesterday’s rate.
The declining 20-day EMA, set at $0.25, coupled with an RSI level below the midline, suggests the likelihood of a bearish trend. If the price slides below the EMA20 threshold, the ADA price may target the crucial support level of $0.235.
Conversely, the 200-day EMA has proven to be a consistent barrier thwarting bullish advancements. This makes it a significant level to monitor closely. If the bulls manage to push the price above $0.262, the ADA price could aim for the next resistance level at $0.28.
