Cardano ADA Surges on New Leveraged Positions, Not Just Short Covering

Cardano's native token, ADA, has surged nearly 100% from its multi-year low of under $0.14 in late June, reaching a multi-month high of over $0.27. Data from Santiment challenges the notion that this rally was solely due to short covering. Open interest in ADA increased by about 25% over two days to over $300 million, even when measured in ADA, suggesting new leveraged positions were being added rather than just short covering.

Santiment highlighted 314 whale transactions worth over $100,000 on October 5, roughly 2.2 times the average for the previous month. While short covering may have played a role, the increase in open interest indicates that traders were entering new positions as the price rose. Funding rates hit their most negative level of the past month on October 2 before turning positive, but Santiment emphasized that covering shorts typically reduces open interest rather than increasing it.

Crypto Patel remains optimistic about ADA's long-term prospects, noting that the token is 98% above his previous accumulation zone. He sets ambitious targets for ADA, including $0.50, $1.00, $2.00, $3.00, and even $5.00, with particular attention to the $2.00-$5.00 zone if the broader structure continues to develop.