Cardano continues to move contrary to market expectations recently. The average return of investors who purchased in the network in the last year fell to minus 43 percent and short positions opened in the futures market reached record levels. This situation suggests that there may be significant recoveries in the price of Cardano when similar conditions occurred in the past.
Cardano Investors Are Suffering Heavy Losses
According to the MVRV (Market Value to Realized Value) ratio of data analysis company Santiment, wallets that have traded on the Cardano network in the last year are currently at an average loss of 43 percent. This indicator reveals the overall picture by comparing the current price of Cardano received by investors with the value of that asset at the time it was purchased.
Santiment defines the range where MVRV is this low as the “opportunity zone.” In the past, reaching these levels, especially in late 2023 and 2024, occurred before serious recovery movements in Cardano’s price.
MVRV generally moves towards zero. When the ratio is extremely negative, it usually means that the most panicked investors are shedding their holdings. What remains are those who prefer to hold on for the long term or those who are willing to incur losses.
Short Positions are at Their Peak, Price Pressure May Reduce
On the other hand, the weekly average funding rate for Cardano on Binance is at the most negative level since June 2023. Funding rates show the balance between long and short positions opened in futures transactions. The fact that the rate is so low indicates that the majority are betting on the price decline, and those holding long positions appear to be receiving payments from short position holders.
This type of accumulation is generally considered a reversal signal. If the price starts to rise, the rise may accelerate as short investors buy to cover their losses. Historical data show that such extreme negative extremes in the funding rate lead to more “short squeezes”, paving the way for an increase rather than a decrease in the price.
The last time these two indicators reached the same level at the same time was in the middle of last year. At the time, ADA was trading around $0.25 and rose nearly 300 percent over the next 18 months.
However, ADA has declined by 71 percent since September. Global markets continue to remain under pressure due to war, high inflation and weak interest rate cut expectations. Additionally, the usage rate and ecosystem growth in the Cardano network did not reach the expected level. All these developments do not give enough signals for a permanent revaluation in price.
Fundamental data aside, current market positioning is the element that attracts the most attention. Finally, it was noted that Cardano was traded at $ 0.26 on Tuesday and experienced a 7 percent decline on a weekly basis.
