Cardano's Price Reversal Traps Over $1 Million in Short Positions

Cardano's recent price movement has caught many margin traders off guard. In early August, the token saw an unusual surge in short positions as traders became overly confident that it would fall to $0.15. However, when the price reversed and started climbing, these traders found themselves trapped.

The hourly chart shows exactly how this trap closed. In late July, Cardano found a local bottom at $0.150. Bears assumed that the support level was about to break and began selling aggressively, but instead of moving lower, the price reversed and started climbing.

The main action began during the attack on the $0.185 level. An impulsive breakout above this mark to a peak of $0.193 caused margin calls to begin triggering across sellers' positions. The forced buying of ADA to cover short sellers' losses accelerated the rally and pushed the token into the top liquidation rankings.

CoinGlass's liquidation heat map clearly shows the scale of the damage suffered by bears. A total of $1.63 million worth of ADA positions was liquidated, with $1.09 million, or more than 66%, lost by short sellers. The 'Max Pain' map shows that the market's main liquidity magnet is located directly above the current price.

To trigger a second wave of forced short closures, Cardano needs to rise by only 4.45%, or approximately $0.008. At the same time, buyers have a much larger safety margin below: the price would need to fall by more than 7% to reach their risk zone at $0.17102.