Cardano (ADA) on Thin Ice: $1M in Long Liquidations Spark Bearish Fears

TLDR:

Table of Contents

Cardano (ADA) is showing bearish momentum after dropping below key support levels.
Technical indicators signal a potential further decline unless ADA breaks above $0.5850 resistance.
The MVRV ratio turning negative suggests ADA is undervalued, possibly signaling a buying opportunity for long-term investors.
Long liquidations have surged past $1 million, indicating a strong shakeout of bullish positions.
A break below $0.550 could lead to a further dip toward $0.50, a key psychological support.

Cardano (ADA) is currently navigating a turbulent period, with bearish momentum gaining strength. After failing to sustain above $0.580, ADA broke down below critical support zones, slipping past $0.5750 and even briefly below $0.5520. This downward move has positioned the token precariously close to key support at $0.550, with a risk of further downside if bullish support fails to materialize.

From a technical standpoint, ADA faces several challenges. It’s trading below the 100-hour simple moving average, and a notable bearish trend line has formed resistance near the $0.570 mark. Despite some minor rebounds, the overall market sentiment remains cautious. If the price fails to breach the $0.5850 resistance, another decline toward $0.530 or even the psychological $0.50 level could unfold.

On-Chain Data Shows ADA is Undervalued — But Does It Matter?

Despite the bearish technicals, on-chain metrics provide a different narrative. Santiment’s data reveals that the Market Value to Realized Value (MVRV) ratio for Cardano has flipped to -12.27%. This indicates that, on average, investors would face a 12% loss if they sold their ADA holdings at current prices—signaling the asset may be undervalued.

Historically, similar MVRV dips have often preceded price recoveries, as they reflect periods of extreme pessimism and reduced selling pressure. However, undervaluation doesn’t always translate to immediate rebounds, especially when external market sentiment is broadly bearish.

Derivatives Market Paints a Bleak Picture as Long Liquidations Surge

The derivatives market tells a story of shaken confidence. ADA’s Open Interest (OI) dropped by 2.15% in the last 24 hours, now standing at around $712 million. This decrease signals that traders are exiting positions rather than opening new ones.

More notably, over $1 million in long positions were liquidated—far surpassing the $180K in shorts. This shakeout of bullish traders has pushed the long/short ratio down to 0.9429, indicating growing dominance of bearish sentiment. The funding rate has also dipped, further suggesting cooled speculative interest.

Technical Patterns Signal Further Downside Risks

ADA is currently trading within a falling channel, a classic bearish continuation pattern. The price has failed to break above the 50-period EMA on the 4-hour chart, bouncing back after each attempt. A breakdown below $0.55 could expose ADA to further declines, potentially retesting the $0.52 weekly low and the key psychological level of $0.50.

While the MACD shows a sell signal, there’s a flicker of bullish hope as the RSI begins to uptick from oversold territory. If buyers can regain control and push ADA above the 50-day EMA, the upper boundary of the falling channel near $0.63 becomes a viable target.

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