- Cardano(ADA) Price Nears Critical Support Level Amid Ethereum ETF Anticipation
- Cardano Faces a Potential Drop to $0.40 as Ethereum Dominates Investor Focus
Cardano’s (ADA) price tumbled towards the $0.45 level on Tuesday, May 28, as Ethereum continues to dominate crypto investors’ short-term preferences.
Cardano Price Falls Further as Ethereum Dominates
Since the United States Securities and Exchange Commission (SEC) approved spot Ethereum ETFs on May 23, the global crypto markets have entered a consolidation phase as investors await the official launch of the ETH derivatives in US markets.
However, as the markets entered a consolidation phase, crucial market data trends show that many traders are redirecting capital away from Ethereum’s arch-rival Proof-of-Stake Layer-1 networks, like Solana (SOL), Cardano (ADA), and Avalanche (AVAX).
Consequently, while the Ethereum price continues to charge towards the $4,000 milestone, Cardano’s price action has taken a negative turn.
Cardano (ADA) Price Action vs. Ethereum (ETH)
As seen in the chart above, ETH price has surged 25% over the past week, holding firm above the $3,800 support level as of May 28. In contrast, Cardano has declined 12% within the same timeframe, falling towards the $0.45 mark.
Recent movements in the Cardano derivatives markets suggest that investors anticipate more downsizing for ADA prices in the days ahead. Coinglass’ Liquidation Map data shows that speculative SHORT traders are now dominating the Cardano markets and deploying unusually high-leveraged bets against ADA.
Looking at the chart, Cardano SHORT traders have deployed $11.91 million in leveraged short contracts around the current prices. Meanwhile, the bull traders have only listed $5.9 million LONG contracts.
When the value of leveraged SHORT contracts surpasses LONGs, it suggests that more traders are betting on a decline in Cardano’s price. This could be due to the widespread sentiment that Ethereum’s growing market status due to the ETH ETF approval could lead to reduced traction for its rival L1 networks.
If the Cardano long traders continue closing out their dwindling positions rather than making covering spot purchases, ADA price could be at risk of losing the critical $0.45 support, potentially tumbling toward $0.40 in the days ahead.
This scenario underscores the heightened volatility and risk in the crypto market, particularly for altcoins like Cardano that face stiff competition from Ethereum’s robust market performance and growing institutional interest. Investors should stay vigilant and monitor these developments closely as the market dynamics unfold.