Cardano has been under pressure and selling for the past four months. It is clear from the daily chart of ADAUSDT that the bears are in control. After peaking in March, prices fell by as much as 60% before finding support in mid-July.
Since then, the ADA has recovered somewhat, but the Bears haven’t relented, especially this week. So far, the ADA is still at 50% after the March peak. This set of conditions could explain the bearish stance of traders on multiple perpetual trading platforms such as Binance and OKX.
The drop in ADA prices and the fact that the trend is bearish from March onwards explains why the funding rate is negative and continues to rise.
Time to Buy ADA Despite Extremely High Negative Financing Rates?
Yet not everyone is extremely bearish. Santiment analysts remark that despite this state of affairs, ADA prices could possibly recover unexpectedly. They explained that the recent spike in negative financing rates, which signals increased sales activity, could present a contrarian opportunity for aggressive traders.
Historically, Santiment analysts explained that prices tend to recover sharply in coming sessions when an asset is extremely sold off, as is the case with ADA. Rapidly rising prices tend to cause a short squeeze, forcing sellers to buy at a higher price and fueling the uptrend.
Nevertheless, this is not always the case, and this contrarian strategy should be pursued with caution. When a particular asset is perceived as ‘extremely oversold’, prices can often fall, even if analysts expect a recovery.
This may mean that traders are not convinced that the asset has what it needs to recover in the wave of intense selling pressure. In this case, traders should stay safe and join the primary trend: bearish.
Cardano whales stay away from the Chang hard fork
Parallel data from IntoTheBlock so far points to declining investor confidence. According to data, the influx of whales has decreased, denting expected optimism. However, this can be attributed to a rebalancing of the portfolio, which could, among other things, influence inflows.
It remains to be seen how ADA will perform in the coming days. Cardano’s development team is preparing for the Chang hard fork, which will be ready by the end of July.
This upgrade will decentralize the smart contract platform by introducing elected representatives tasked with shaping the Cardano Constitution. Chang’s successful implementation will herald Cardano’s final phase of development, Voltaire. This in turn effectively decentralized the network, similar to Ethereum.