Cardano is near a crucial level as signs of recovery in the altcoin market fade. Despite a bullish buyback, ADA has faced an uphill battle over the past two weeks, struggling to break free from the critical $0.25 threshold. Recent trading sessions have led to increased selling pressure, leaving investors wondering if the recovery rally was just a fleeting moment and whether a liquidation phase may be on the horizon.
ADA Traders Turn Bearish Amid Declining Open Interest
Cardano (ADA) is encountering some bumps on the road to recovery. Lately, ADA traders have been showing increasing bearish sentiment, and a key indicator turning red is the declining open interest in ADA contracts.
As evidenced by current data on ADA futures open interest, the measure has been on a downward trajectory, reaching levels last seen in 2021. At the time of writing, open interest has fallen to $98.6 million, indicating a decline in trading activity among market participants.
Amid this, the funding rate for Cardano has turned negative, indicating that traders with short positions are in the driver’s seat and are even willing to compensate those with long positions. A negative funding rate is generally a sign of bearish sentiment among traders. Currently the weighted financing rate is 0.0063%.
Falling open interest amid a bearish funding rate is often seen as confirmation of a downtrend, setting off alarm bells for traders. The current scenario suggests traders are exiting their positions or reluctant to open new positions, further fueling selling sentiment. Also contributing to the growing bearish outlook is ADA’s struggle to keep the price above $0.25.
What’s next for the ADA award?
Over the past few hours, ADA price witnessed a firm rejection on an attempt to rise above the crucial USD 0.25 resistance level as bears intensified their selling dominance to avoid an immediate rise. However, buyers are defending a decline below the $0.24 level to maintain buying sentiment. At the time of writing, the ADA price is trading at $0.248, down more than 0.9% from yesterday’s price.
The declining 20-day EMA, set at $0.25, coupled with an RSI level below the midline, indicates the likelihood of a bearish trend. If the price breaks below the EMA20 threshold, the ADA price could target the crucial USD 0.235 support level.
Conversely, the 200-day EMA has proven to be a consistent barrier against bullish progress. This makes it an important level to keep a close eye on. If the bulls manage to push the price above $0.262, ADA price could target the next resistance level at $0.28.