Cardano Rally Fueled by Fresh Leverage Not Just Short Squeeze

Cardano’s recent rally saw a significant increase in leverage, casting doubt on the idea that the price surge was solely driven by short sellers being forced out. Data from Santiment shows that open interest in ADA futures climbed to $304 million by October 5, the highest level since early April. During this period, ADA’s price rose from $0.244 on October 3 to $0.270 on October 5, a gain of roughly 11%.

While ADA’s price increased by about 10% over two days, open interest surged by approximately 25%, reaching $304 million. This rise in open interest suggests that new leveraged positions were being added rather than just shorts being covered. Even after adjusting for ADA’s price increase, open interest in ADA terms still grew by about 13%, indicating genuine growth in positioning.

The data does not entirely rule out short covering as a factor in the rally. Funding rates hit their most negative level in a month on October 2 before turning positive as ADA advanced, suggesting some bearish positions were closed. However, the simultaneous rise in open interest points to a more complex dynamic, where short covering and fresh leverage both played roles.

Whale activity surged during the rally, with 413 transactions worth at least $100,000 on October 5, more than double the weekday average. Meanwhile, social volume remained relatively stable, indicating that large-value trading accelerated much faster than public discussion about Cardano. The next challenge for ADA will be maintaining its gains amid elevated open interest, as higher leverage could amplify both upward and downward price movements.