Cardano (ADA) is facing the risk of a price reversal towards $0.40 if certain factors unfold. Currently, Ethereum is dominating the short-term preferences of crypto investors, causing Cardano’s price to fall towards the $0.45 level. This shift in market sentiment can be attributed to the approval of spot Ethereum ETFs by the US Securities and Exchange Commission on May 23. As a result, many traders are diverting capital away from Cardano and other Proof-of-Stake Layer-1 networks, such as Solana and Avalanche, towards Ethereum. While Ethereum’s price continues to surge towards $4,000, Cardano has experienced negative price action, declining 12% over the past week. Looking at the derivatives market for Cardano, data suggests that investors anticipate further downsizing for ADA in the days to come. Coinglass’ Liquidation Map data reveals a dominance of speculative SHORT traders, who have deployed high-leverage bets against ADA. In contrast, bull traders have listed significantly fewer LONG contracts. When the value of leveraged SHORT contracts surpasses LONGs, it indicates a sentiment of betting on a decline in Cardano’s price. This could be attributed to the belief that Ethereum’s growing market status, driven by the approval of the ETH ETF, may reduce traction for rival L1 networks like Cardano. If Cardano long traders continue closing their positions instead of making spot purchases, the critical support level of $0.45 could be lost, potentially leading to a further tumble towards $0.40 in the coming days.
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Cardano (ADA) Price at Risk of $0.40 Reverse If this Happens
