- The financing percentages of Cardano have fallen to -49%, which marks the lowest level in more than a year.
- This dip showed a high demand for short positions when the bearish sentiment rose.
The Cryptocurrency market recorded huge losses on 3 February, with the total market capitalization falling by 10% within 24 hours.
Cardano [ADA] was one of the biggest losers after a decrease of 24% to act on the $ 0.67 press.
The dip of the Altcoin saw more than $ 31 million in Ada -long positions that were liquidated. This meant the second highest level of long liquidations in one year.
Since these positions were closed vigorously, it caused an increase in sales activity that put further downs on the price.
This long squeeze also caused a shift in the derived market of Cardano, as shown in the drastic decrease in financing rates.
Financing percentages are an annual low
The financing percentages of Cardano have registered a steep fall in the last 24 hours and reached the lowest level in one year.
At the time of the press, this metric was -49%, which indicates a high demand for short positions and reduced bets that Ada will win.
Source: Coinglass
A steep decrease in financing rates shows that traders have become Bearish on the Altcoin, as they expected decreases. However, such a steep fall can lead to a potential short squeeze if the trend unexpectedly reverses.
Can Cardano bounce from a lowest point in two months?
The 24-hour Dip from Cardano has led the price to fall to the lowest level in almost three months. Sellers were behind this decline, as seen in the $ 736 million in the sale of volumes.
However, sellers can be close to achieving exhaustion after a decrease in relative strength index (RSI) to a sold -over level of 25.
Ada has also fallen under the lower Bollinger band with large volumes, which also points to over -sold circumstances.
Source: TradingView
If traders begin to buy the current dip, this can cause a trend removal. Nevertheless, to confirm a bullish trend, Ada has to turn resistance from $ 0.84.
On the other hand, a decrease in the support level of $ 0.31 can cause further dips.
Read cardanos [ADA] Price forecast 2025–2026
Reduced Defi activity can feed the downward trend
Data of Defillama showed a significant decrease in activity on the Cardano network. At the time of the press, the total value (TVL) had fallen to $ 312 million, which marked the lowest level since the beginning of November.
This decreasing activity could feed the Bearish Trend of Cardano. However, traders must look forward to an increase in Defi activity, because that could coincide with a rally.