• Cardano’s Funding Rates have dropped to -49%, marking the lowest level in over a year. 
• This dip showed a high demand for short positions as the bearish sentiment rose. 

The cryptocurrency market recorded massive losses on the 3rd of February, with the total market capitalization dropping by 10% within 24 hours.

Cardano [ADA] was among the biggest losers after falling by 24% to trade at $0.67 at press time. 

The altcoin’s dip saw more than $31 million in ADA long positions being liquidated. This marked the second-highest level of long liquidations in one year. 

As these positions were forcefully closed, it caused a surge in selling activity that exerted further downward pressure on the price.

This long squeeze also caused a shift in Cardano’s derivative market, as seen in the drastic drop in funding rates. 

Funding Rates hit a yearly low 

Cardano’s Funding Rates have recorded a steep decline in the last 24 hours and hit the lowest level in one year.

At press time, this metric stood at -49%, indicating high demand for short positions and reduced bets that ADA will gain. 

A steep decline in Funding Rates shows that traders have become bearish on the altcoin as they anticipated further declines. However, such a steep drop could lead to a potential short squeeze if the trend reverses unexpectedly.

Can Cardano bounce from a two-month low? 

Cardano’s 24-hour dip has led to the price dropping to its lowest level in nearly three months. Sellers were behind this downturn, as seen in the $736M in selling volumes. 

However, sellers could be close to reaching exhaustion following a decline in the Relative Strength Index (RSI) to an oversold level of 25.

ADA has also dipped below the lower Bollin

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Author: Muthoni Mary