Cardano Surges 10% as Short Sellers Face Liquidations

Cardano (ADA) surged 10% to reach a five-month high of $0.27, with the altcoin currently trading around $0.26. The rally was supported by a 297% spike in spot trading volume, indicating heightened market activity.

The price jump caught many short sellers off guard, leading to the liquidation of $2.1 million worth of short positions. Despite these liquidations, bearish sentiment persisted as more capital flowed into the derivatives market.

Open interest in Cardano derivatives surged 18% to $635 million, while derivatives volume jumped 355%. However, the Long/Short Ratio dropped to 0.71, signaling a bearish skew across exchanges. Additionally, Cardano recorded $337 million in futures inflows against $321 million in outflows.

Spot netflow remained positive for two consecutive days, standing at $1.34 million at press time. This positive netflow suggested that exchange inflows exceeded outflows, potentially indicating preparations for profit-taking. Despite this, momentum indicators still favored buyers.

Cardano's True Strength Index (TSI) formed a bullish crossover, rising to 24, while the altcoin climbed above its 20-day Exponential Moving Average (EMA) at $0.24. These indicators supported a bullish outlook, but further gains would depend on buyers maintaining pressure. If the rally continues, ADA could target $0.28 and $0.30, provided it holds the $0.24 support level.