Long/Short Ratio 0.65, Worst Retreat… Experts Warn of Cardano $0.236 Collapse Scenario

▲ Cardano (ADA) ©

Amid increasing downward pressure across the virtual asset market, the price of Cardano (ADA), one of the major altcoins, has fallen below a psychological threshold, pushing derivative traders' bearish bets to a peak, raising tensions about a potential further sharp decline.

According to the investment media FXStreet on May 25 (local time), ADA's price has plummeted by over 15% in the past two weeks, dropping below the $0.250 (USD) mark on Monday, continuing a clear bearish trend. Along with this price drop, key indicators in the derivatives market, including futures and options, have all turned bearish, deepening concerns that this correction phase could last longer than expected. Funding rates from CoinGlass, a derivatives data analysis platform, turned negative last Sunday and further dropped to -0.0078% on Monday. A negative funding rate means that holders of long (buy) positions must pay fees to holders of short (sell) positions, clearly indicating that a pessimistic sentiment expecting a decline dominates the current market.

Simultaneously, ADA's long-to-short ratio, as compiled by CoinGlass, also plummeted to 0.65 as of Monday, approaching its lowest level in a month. This ratio falling significantly below the benchmark of 1 means that an overwhelmingly larger number of traders are betting on a further decline in the asset's price. As downward pressure in the derivatives market intensifies, the environment is becoming difficult to expect a short-term rebound even from a technical analysis perspective.

Currently, the ADA price is completely trapped below the congested zone of $0.256 to $0.350, which includes the 50-day, 100-day, and 200-day exponential moving averages (EMAs) representing short-term, medium-term, and long-term trends, indicating very strong short-term downward pressure. Previous attempts to break above the downward resistance trendline failed, and the breakout point of $0.268 still heavily weighs overhead, maintaining a closed structure with limited upside. Furthermore, the Relative Strength Index (RSI) on the daily chart has fallen to the high 30s, accurately reflecting weakened buying power, and the Moving Average Convergence Divergence (MACD) remains in negative territory, suggesting that the downtrend is intensifying rather than market momentum recovering.

Media experts analyzed that even if a short-term rebound occurs upwards, a stacked wall of resistance is built up, starting with the horizontal barrier of the primary resistance at $0.245, followed by the 50-day EMA at $0.256, and the trendline breakout zone at $0.268. Above that, a massive supply zone consisting of the 23.6% Fibonacci retracement level at $0.271 and the 100-day EMA at $0.276 stands firm, making an upward breakout difficult without strong positive catalysts.

Consequently, if selling pressure reignites in the future, the primary horizontal support level is expected to form around $0.236. Experts warned that if buying power fails to defend this last bottom line and the support level clearly breaks, ADA's price could face a stormy period of another steep retreat within the larger downtrend structure defined by the descending long-term EMA indicators and higher Fibonacci retracement levels.

*Disclaimer: This article is for investment reference only and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*