As a long-term crypto investor with some experience under my belt, I find Santiment’s analysis intriguing. The increase in short positions against Cardano ($ADA) and XRP could indeed be a positive sign for potential long-term investors. Liquidated shorts can act as a catalyst to push the prices of these cryptocurrencies higher.
Investors who short sell, or wager that the price of an asset will decrease, have been ramping up their positions against Cardano ($ADA) and XRP ($XRP), the native token of the XRP Ledger. This could be a favorable sign for potential long-term investors since liquidated shorts can contribute to pushing up the prices of these cryptocurrencies.
Based on data from crypto analytics firm Santiment, posted on microblogging platform X (previously known as Twitter), funding rates on the Binance exchange have shown a prevalence of short positions over long ones for ADA since September 2023, and for XRP starting May 2024.
The discovery arises as investors look for a resurgence in the cryptocurrency sector, with ADA and XRP being two altcoins displaying an increase in short positions after a recent surge in prices. Short selling involves borrowing an asset, instantly selling it, and then buying it back at a later date when the price has dropped to make a profit from the price difference.
📈 Cardano and XRP are a couple of the most notable altcoins that are seeing heavy trader shorting following relief bounces. This is a good sign for patient bulls, as liquidates shorts can effectively act as ‘rocket fuel’ for continued price rises. — Santiment (@santimentfeed) June 19, 2024
This week, Santiment’s analysis revealed that ADA and XRP might be underpriced based on their Market Value to Realized Value (MVRV) ratios. The MVRV ratio, which is calculated by comparing an asset’s market capitalization to the total value of all coins in circulation that have been previously sold, suggested that ADA could be significantly undervalued and showed “mildly bullish signs” for XRP. Historically, assets with low MVRV ratios have experienced price increases due to renewed buying interest attracted by their perceived undervaluation.
Market analysts, including Santiment and the anonymous analyst known as Cryptobilbuwoo, are expressing positive views towards XRP and Cardano. Cryptobilbuwoo’s analysis, based on weekly charts, suggests a connection between XRP’s price fluctuations and altcoin dominance (ALT.D).
According to his interpretation of the charts, every time ALT.D hits a resurgence along its upward trendline, XRP typically experiences a price increase. This uptick in XRP can have a favorable ripple effect on the entire altcoin market. Based on this technical assessment, there’s a strong possibility that XRP could reach $2.71, marking a potential technical recovery.
As a cryptocurrency analyst, I believe that the recent downtrend in Cardano’s price presents an excellent opportunity for investors looking to dollar-cost average (DCA) into this digital asset. Meanwhile, the market sentiment suggests that a potential rebound for Cardano’s price is on the horizon.
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2024-06-21 03:56