Cardano Falls Below Key Support: Traders Go Massively Short, Where Is the ADA Price Headed?

On December 5, Cardano’s price showed early signs of recovery after hitting $0.44, rising 3.79% over the past 24 hours.

However, this small rebound does little to mask the harsh reality ADA faces: since November, its price has fallen by over 30%, with broader cryptocurrency market sell-offs intensifying the decline.

Derivatives data shows funding rates have turned negative, traders are increasing short bets, and technical indicators also display a bearish bias.

01 Quick Overview

Cardano had an unfavorable start to December. According to the latest data on December 5, despite ADA posting a 3.79% intraday gain and trading at around $0.44, this is merely a weak rebound from a recent sharp drop.

Since November, ADA has fallen by more than 30%, with a bearish sentiment dominating the market.

This decline is not occurring in isolation; it is happening in tandem with a broader cryptocurrency market sell-off. Volume data offers a glimmer of hope: ADA’s trading volume exceeded $1.1 billion in the past day, indicating capital is testing the current price range.

Overall market weakness is reflected in derivatives data. ADA futures open interest fell by 6.82% within 24 hours to $693 million, demonstrating that traders’ risk capital is exiting.

02 Multiple Pressures Behind the Decline

The drop in ADA’s price is the result of a triple pressure from trader sentiment, market structure, and on-chain activity.

Signals from the derivatives market are particularly noteworthy. The open interest weighted funding rate has turned negative, at -0.0057%. While seemingly small, this figure sends a clear signal: bearish traders are gaining confidence and are willing to pay a premium to hold short positions.

A long/short ratio of 0.8765 further confirms the pessimism in the market, with short positions accounting for 53.29% of all derivative contracts, indicating that sellers are dominating.

From a technical analysis perspective, ADA is facing a critical support test. The daily Relative Strength Index (RSI) is at an oversold level of 26, while the Moving Average Convergence/Divergence (MACD) indicator is nearing a potential bearish crossover.

If the daily close falls below the November 21 low of $0.3876, ADA may face a further downside risk of up to 15%, testing the $0.3264 support.

03 Potential Opportunities in the Longer-Term Structure

Despite heavy short-term pressure, analysis on a higher timeframe suggests Cardano may be approaching a key structural inflection point.

Since 2021, ADA has been forming a multi-year descending wedge pattern, with its price range gradually converging. This pattern typically signals impending volatility, and while it doesn’t directly indicate direction, it’s worth close attention when appearing near historical support levels.

The price is currently testing the upper boundary of this wedge, around the $0.48 to $0.50 area, a region that has seen strong rejections multiple times in the past.

A notable positive signal is that the Super Trend indicator has recently issued its first buy signal in months on ADA’s high timeframe chart. Meanwhile, the RSI is also showing signs of breaking above its descending resistance line.

These momentum indicator shifts suggest that, while the overall market remains in a macro downtrend, the downward momentum may be weakening. A stabilization at key support could set the stage for a medium-term recovery.

04 Market Forecasts and Key Levels

Analysts are divided on ADA’s future trajectory, with predictions ranging from conservative to optimistic, reflecting the current high market uncertainty.

In the short term, price may fluctuate between the $0.39 to $0.48 range, corresponding to a potential decline of 11% or a rise of 9%. More aggressive views suggest that, if a recovery scenario plays out, ADA could target the $0.65 to $1.69 region in the medium term.

From a technical perspective, ADA faces direct resistance near $0.51. Successfully breaking this level could trigger momentum toward $0.65, and potentially challenge even higher targets.

However, if the bearish scenario prevails, $0.37 becomes a critical support. Falling below this level may validate a more pessimistic outlook, prompting ADA to test its yearly lows.

05 Trading ADA on Gate

For traders focused on Cardano, Gate.io offers comprehensive trading tools and market data to help users make informed decisions in a volatile market.

The ADA/USDT pair on the platform provides real-time price data, including both spot and perpetual contract options. Gate’s converter tool allows easy conversion of ADA into a variety of fiat and cryptocurrencies, such as USD, EUR, and more.

For traders with different risk preferences, Gate offers a range of trading strategy options. Short-term traders can watch for a breakout above the $0.48 resistance, while conservative investors may consider building positions gradually in the $0.42 to $0.44 range.

It is worth noting that, under the current market conditions, it is recommended to limit ADA position sizes to within 2% to 3% of your portfolio until clearer directional signals emerge.

Long/Short View Summary

Outlook

When market analyst AltcoinPiooners showcased that multi-year descending wedge chart on social media, the entire Cardano community’s attention focused on the critical support zone between $0.40 and $0.42.

This gradually converging trendline since 2021 now carries all hopes for ADA’s potential to bottom and rebound.

Buy signals in a downtrend can feel like “catching a falling knife”—the recent Super Trend buy signal and RSI breakout may be early signs of a market turnaround, or just a brief respite during the decline.

Long/short ratio data from the Gate trading platform reveals a harsh reality: more than half of derivatives traders are betting on ADA to fall further.