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Cardano’s (ADA) price tumbled towards the $0.45 level on Tuesday, May 28, as Ethereum continues to dominate crypto investors’ short-term preferences.
Cardano price falls further as Ethereum Dominates
Since the United States Securities and Exchange Commission (SEC) approved spot Ethereum ETFs on May 23, the global crypto markets have entered a consolidation phase as investors await the official launch of the ETH derivatives in US markets.
However, as the markets entered a consolidation phase, crucial market data trends show that many traders are redirecting capital away from Ethereum’s arch-rival Proof-of-Stake Layer-1 networks, like Solana (SOL) and Cardano (ADA) and Avalanche (AVAX).
Consequently, while the Ethereum price continues to charge towards the $4,000 milestone, Cardano’s price action has taken a negative turn.
As seen in the chart above, ETH price has racked-up a 25% surge over the past week, holding firm above the $3,800 support level at the time of writing on May 28. But Cardano on the other has now decline 12% within the weekly time frame, as it fell toward the $0.45 mark.
However, digging deeper, the recent movements in the Cardano derivatives markets suggests that investors are anticapting more downsizing for ADA price in the days ahead.
Coinglass’ Liquidation Map data shows that speculative SHORT traders are now dominating the Cardano markets and deploying unusually high-leveraged bets against ADA.
Looking at the chart above, Cardano SHORT traders have deployed $11.91 million leveraged short contract around the current prices. Meanwhile, the bull traders have only listed $5.9 million LONG contracts.
When the value of leveraged SHORT contracts surpasses LONGs, it suggests that more traders are betting on a decline in Cardano’s price. This could be due to the widespread sentiment that Ethereum’s growing market status due to the ETH ETF approval could lead to reduced traction for its rival L1 networks.
If the Cardano long traders continue closing out their dwindling positions rather than make covering spot purchases, ADA price could be at risk of losing the critical $0.45 support, as tumbling toward $0.40 in the days ahead.