Value chain analytics firm Santiment has revealed that Cardano (ADA) is one of the altcoins that is likely to see a price escalate soon.

Cardano Among Altcoins That Are Currently Heavily Shorted

In New fasting in X, Santiment talked about altcoins that were being shorted in the derivatives market. The metric of significance here is “Funding Rate,” which tracks the periodic fee that derivatives traders have to pay to trade with each other.

When the value of this metric is positive, it means that long-term contract holders are currently paying a premium to short-term investors to maintain their positions. Therefore, this type of trend indicates the presence of a bullish sentiment from the majority in the market.

On the other hand, a negative indicator suggests that currently the number of compact holders exceeds the number of long holders and, therefore, the sector is in a bearish mood.

In the current topic, Santiment addressed the funding rate specifically for the Binance cryptocurrency exchange, which is the largest platform in terms of trading volume and should therefore mirror the trend on other major exchanges.

Here is a chart provided by the analytics firm that shows the trend of this indicator for the three altcoins over the past few months:

As seen in the chart above, all three Cardano stocks, Chiliz (CHZ), and Fantom (FTM), have recorded a negative Binance funding rate for the past five weeks, which means that investors have been continuously betting against a bullish performance from these stocks.

Historically, such aggressive shorting of any asset has had a positive impact on its price. This is because liquidation pressure is now more likely to flow to the dominant side of the market.

A “liquidation squeeze” is an event where a sudden price movement causes a vast number of contracts to be liquidated at once. These liquidations are linked to the movement that caused them, amplifying it and starting a cascade of further liquidations.

The chart shows that these three altcoins also saw similar levels of shorting at the start of the year. This bearish bias was followed by a rally in their prices, with Cardano up 10%, Chiliz up 32%, and Fantom up 49%.

Given this trend, it is possible that we will see compact liquidations again for these altcoins, leading to higher prices.

ADA Price

Cardano previously broke through the $0.45 barrier, but the price has apparently fallen sharply since then and currently sits at around $0.39.