$0.40 Risk Reversal Price

As Ethereum continues to dominate the short-term appetite of crypto investors, the price of Cardano (ADA) dropped to the $0.45 level on Tuesday, May 28.
With the U.S. Securities and Exchange Commission (SEC) approving a spot Ethereum ETF on May 23, the global cryptocurrency market has entered a consolidation phase as investors await the official launch of ETH derivatives in the U.S. market.
However, as the market enters a consolidation phase, key market data trends suggest that many traders are moving funds away from Ethereum’s competing Proof-of-Stake Layer-1 networks such as Solana (SOL), Cardano (ADA), and Avalanche (AVAX).
Hence, while Ethereum price continues to rapidly climb towards the $4,000 milestone, Cardano’s price action has taken a negative turn.
As shown in the above chart, Ethereum price has risen by 25% in the past week and is still firmly above the $3,800 support level at the time of writing on May 28. But on the other hand, Cardano has lost 12% in the past week, falling to $0.45.
However, a deeper look at recent movements in the Cardano derivatives market suggests that investors are expecting ADA prices to drop further in the coming days.
Coinglass’s Liquidation Map data shows that speculative short traders now dominate the Cardano market and are placing abnormally high-leverage short bets on ADA.
As can be seen from the above chart, Cardano short traders have deployed $11.91 million in high-leverage short contracts around the current price. Meanwhile, bullish traders listed only $5.9 million in long contracts.
When leveraged short contracts are worth more than long contracts, it means that more traders are betting on Cardano’s price to fall. This may be due to the general belief that due to Ethereum’s strengthened market position, the approval of an ETH ETF may lead to a decrease in the attractiveness of its rival L1 network.
If long Cardano traders continue to close their positions instead of making spot purchases, the price of ADA could be at risk of losing the critical $0.45 support level and drop to $0.40 in the coming days.
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