Cardano (ADA) is drawing attention after new market data shows significant losses for many Cardano investors. On Tuesday, March 24, the analytical platform Santiment highlighted that “wallets active in the past year are losing an average of 43% in value, and such a reading is linked to an opportunity zone.”
Santiment stated that this negative MVRV reading is significant, as it indicates that there is deep pain in the market. The platform further added that these levels usually represent a low-risk period for traders seeking to enter or add to a position.
This metric calculates the average returns for holders over a specified period of time. In this case, the one-year period indicates that most people are still far from their entry point.
Santiment also highlighted ADA’s price weakness. The platform noted that ADA has declined by 71% since September. This decline has impacted investor sentiment about ADA.
Low MVRV May Put ADA in Reversal Zone
Despite ADA’s decline, Santiment noted that extremely low MVRV figures can signal a reversal. When average returns are extremely low, it can be a more attractive time for stakeholders and professional traders.
The platform framed the condition as part of a zero-sum market structure. It added that coins typically average 0% over time on MVRV, and therefore, any negative figures are noteworthy in determining market position.
In addition to the on-chain data, Santiment also provided derivatives data from Binance and stated that the funding rate for Cardano is showing the highest ratio of shorts to long positions since June 2023.
This indicates that many investors still believe the price will go down further. According to Santiment, such a funding rate has always been a sign that the price is about to find a bottom.
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When the price starts to move in a direction that is opposite to the majority’s expectations, liquidation can actually help the price move in the opposite direction. The short-heavy funding rate for Cardano increases the chances that the price will go up if the short positions are liquidated.
ADA Volume and Open Interest Rise
According to CoinGlass data, the market activity around ADA has increased significantly. The future volume increased by 81.45% to $1.07 billion. Open interest has surged by 1.73% to $390.56 million.
The OI-weighted funding rate is at 0.0031%. This figure added more context to the derivatives market as traders continued to accumulate positions at the current price levels.
The liquidation data over the past 24 hours also shows the pressure in the market. The total liquidation is at $820.45K, where long positions made up $222.75K, and shorts were at $597.70K.
The increased short liquidations also aligned with Santiment’s view that the market’s bearish positions are becoming crowded. The combined MVRV, short imbalance, trading volume, and open interest data kept ADA in the spotlight as traders waited for a potential change.
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