ADA weakens amid tariff fears and rising short positions
The cryptocurrency market had yet another bearish weekend, with Bitcoin, Ether, XRP, and other major coins currently in the red.
The bearish performance saw nearly $500 million worth of leveraged positions wiped out in the market in the last 24 hours.
ADA, the native coin of the Cardano blockchain, is down by more than 2% on Monday, entering its third consecutive day of decline.
The negative performance is backed by the strong bearish bias in Cardano’s derivatives market positional buildup.
The market dumpwas primary due to the US President Donald Trump's reassessment of global tariffs and domestic conflict with the US Supreme Court.
Currently, technical indicators are bearish, but ADA could experience a temporary pump in the near term.
Cardano remains under pressure
ADA dropped out of the top 10 earlier this month and continues to occupy the 11th spot in the market.
It is currently down by nearly 3% in the last 24 hours as shifting macroeconomics weigh on the crypto market.
The dip comes as retail participation in the market continues to decline.
According to CoinGlass, the ADA futures Open Interest (OI) stands at $446.84 million, down 3% over the last 24 hours, indicating significant capital withdrawal amid risk-off sentiment among traders.
The data reinforces a bearish bias in the market, lowering the long-to-short ratio to 0.8619, suggesting a greater number of active short positions.
Furthermore, ADA’s funding rate has dropped to -0.0138%, indicating heightened interest among traders in holding short positions.
With a funding rate below 1, ADA currently reflects unsustainable levels of selling pressure, which could see the bulls increase their positions in the near term.
Will Cardano hold the $0.2563 support level?
The bulls have been able to hold ADA’s support level at $0.2563 in the last 24 hours, but the coin remains under pressure.
At press time, ADA is trading at $0.2706, below the 50-period Exponential Moving Average (EMA) at $0.2773 and the 200-EMA at $0.3013.
The 50-period EMA remains below the 200-period EMA, reinforcing downside pressure.
If the bearish trend persists and ADA closes below the $0.2563 support level, the coin could experience further decline towards the February 6 low at $0.2205.
The Relative Strength Index (RSI) is at 45 on the 4-hour chart, dropping below the neutral zone, indicating a surge in selling pressure.
Furthermore, the Moving Average Convergence Divergence (MACD) is in a free fall below the zero line, reaffirming the increase in bearish momentum.
If the bulls hold the support level and the daily candle closes above the $0.2695 resistance, ADA could test the 50-day and 200-day EMAs at $0.2773 and $0.3013, respectively.
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