With investors eagerly anticipating a much-needed rebound in the price actions of the crypto market, Cardano (ADA) and Ripple’s XRP have emerged as two of the most prominent altcoins experiencing heavy trader shorting after a brief respite.
This activity comes amidst mild hints of a rebound in their prices.
Heavy Shorting on ADA and XRP
According to the data shared by Santiment, the finding rates for both ADA and XRP on Binance have spiked into positive territory multiple times, indicating a dominant shorting vs. longing ratio since September 2023 for the former and May 2024 for the latter.
The recent upticks may have led traders to believe that a downtrend is likely, thereby prompting many to short the two altcoins.
However, Santiment believes this heavy shorting activity could be a positive signal for “patient bulls.”
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. pic.twitter.com/lHdMCLbngR
— Santiment (@santimentfeed) June 19, 2024
Earlier this week, the on-chain analytic platform found that Cardano showed extreme undervaluation with an MVRV of -12.6%, while that of XRP stood at -3.5%. For ADA, this analysis indicated very bullish prospects for its price recovery. Meanwhile, for the latter, the MVRV ratio suggested mild bullish conditions.
The low MVRV ratio suggests that traders are currently holding assets at prices below their initial buying costs. Historically, this oversold scenario has been followed by a rebound as the asset attracts buying interest.
Catalysts for ADA and XRP
Cardano, for one, appears to be gearing up for a major milestone that could serve as a catalyst for its token. Chang hard fork is expected to pave the way for the Voltaire era making Cardano’s transition from a blockchain governed by its founding entity Input Output Global (IOG) to a fully decentralized and community-driven ecosystem.
Announcing the same, IOG founder Charles Hoskinson recently tweeted,
“It looks like June will be the month that Cardano Node will reach 9.0. This means that Cardano is Chang fork ready and waiting for 70 percent of the SPOs to install the new node. Then, a hard fork can occur pushing Cardano into the Age of Voltaire.”
Meanwhile, XRP has noted minor spikes amidst a broader market downturn. The latest surge in open interest (OI) further suggested that investors are increasingly opening positions anticipating a rise in the asset’s price as they closely track the legal spat between blockchain firm Ripple and the US Securities and Exchange Commission (SEC).
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