Cardano (ADA) witnessed a decline in price towards the $0.45 level on Tuesday, May 28, as Ethereum continues to dominate the short-term preferences of crypto investors.
The approval of spot Ethereum ETFs by the United States Securities and Exchange Commission (SEC) on May 23 has led to a consolidation phase in the global crypto markets. Investors are eagerly awaiting the official launch of ETH derivatives in the US markets.
During this consolidation phase, market data trends indicate that many traders are diverting their capital away from Ethereum’s competitors in the Proof-of-Stake Layer-1 networks, such as Solana (SOL), Cardano (ADA), and Avalanche (AVAX).
Consequently, while the price of Ethereum continues to surge towards the $4,000 milestone, Cardano’s price has experienced a negative turn.
When comparing the price actions of Cardano ADA and Ethereum ETH, it is evident that ETH has seen a 25% surge over the past week, remaining above the $3,800 support level. On the other hand, Cardano has declined by 12% within the same time frame, falling towards the $0.45 mark.
A closer look at the recent movements in the Cardano derivatives markets reveals that investors are anticipating further downsizing for ADA in the coming days.
Data from Coinglass’ Liquidation Map shows that speculative short traders are dominating the Cardano markets, placing unusually high-leveraged bets against ADA.
Analyzing the chart, it is evident that Cardano short traders have deployed $11.91 million in leveraged short contracts at current prices. In contrast, bull traders have only listed $5.9 million in long contracts.
When the value of leveraged short contracts exceeds long contracts, it indicates that more traders are betting on a decline in Cardano’s price. This sentiment may be attributed to the belief that Ethereum’s growing market status, following the approval of the ETH ETF, could lead to reduced traction for its rival Layer-1 networks.
If Cardano long traders continue to close their positions instead of making spot purchases, the ADA price could potentially lose the critical $0.45 support level, further declining towards $0.40 in the coming days.
Disclaimer: This content serves as informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions. The Crypto Basic holds no responsibility for any financial losses incurred.