cryptoglobe.com
Short sellers have been increasing their bets against both Cardano ($ADA) and the native token of the XRP Ledger ($XRP) in a potential positive development for poatenti long-term investors as liquidated shorts can help propel these cryptocurrencies’ prices.
That’s according to on-chain analytics firm Santiment, which noted in a post on the microblogging platform X (formerly known as Twitter) that funding rates on cryptocurrency exchange Binance indicate a dominance of short positions over longs since September 2023 for ADA and May 2024 for XRP.
The finding comes as investors seek a revival in the cryptocurrency market, with ADA and XRP emerging as two altcoins experiencing a rise in short positions following a recent price uptick. Short selling sees traders borrow an asset, sell it, and aim to repurchase it later at a lower price to pocket the 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. pic.twitter.com/lHdMCLbngR
— Santiment (@santimentfeed) June 19, 2024
Earlier this week, Santiment’s analysis identified both ADA and XRP as potentially undervalued. The Market Value to Realized Value (MVRV) ratio, which compares the market capitalization of an asset to the total realized value of all its coins in circulation, indicated ADA could be extremely undervalued and “mild bullish conditions” for XRP. Historically, low MVRV ratios have been followed by price rebounds as undervalued assets attract renewed buying interest.
Market analysts are also echoing Santiment’s optimistic outlook, particularly for XRP and Cardano. A pseudonymous analyst going by Cryptobilbuwoo shared a weekly chart-based analysis suggesting a correlation between XRP’s price movements and altcoin dominance (ALT.D).
His analysis suggests that whenever ALT.D retests an upward trend line, XRP tends to rise, positively impacting the entire altcoin market. Based on his technical analysis, XRP could potentially surge to $2.71, signifying an impending technical rebound.
Meanwhile analysts are suggesting the price of Cardano could soon rebound and its current price level is “an incredible opportunity” to dollar-cost average (DCA) into the cryptocurrency as its price trends down.
Featured image via Unsplash.