The first week of March just came to a close with ADA price experiencing excitement. Zoomig out on its price action reveals that it has been trading within ax bullish megaphone pattern and this may offer insights into ADA performance.
ADA had a $0.864 price tag at the time of observation, which was equivalent to a 26% dip from its weekly high. That weekly high was courtesy of Trump’s announcement that the Cardano native coin would be part of the U.S crypto reserve.
More importantly, the retracement occurred after ADA price retested the descending resistance which constitutes its megaphone pattern. But, with the pattern extending longer, investors are starting to anticipate a breakout.
One analyst has predicted that a breakout from the megaphone pattern could trigger a major uptrend. He even speculated that the subsequent rally could push ADA as high as $2.
The cryptocurrency’s previous major bullish breakout saw price push as high as $1.32. The last time that ADA price traded above $2 was in November 2021.
ADA funding rates move against sentiment
The Cardano native cryptocurrency’s derivatives segment activity may offer insights into the next potential market move. Perpetual volumes were up 18.29% while options volume dipped by 92.94% in the last 24 hours.
The above observation could signal uncertainty at the current level hence the decline in options. Meanwhile, negative funding rates surged to levels last seen on 3 February.
The surge in funding rates suggests that there was a surge in short positions in the derivatives market. Unsurprisingly, price embarked on a 9% dip in the last 24 hours.
If price ended up being bullish, then the potential liquidations would have been massive. Speaking of liquidations, roughly 12.96 million worth of long positions were liquidated as price dipped lower, compared to a lower $3.36 million in short liquidations.
Is ADA price on the verge of a bullish pivot?
The heavy liquidations and bearish outcome reveal an outcome contrary to the rising bullish sentiment. However, this downside may also turn out to be a trap for short sellers.
Price embarked on a substantial bullish recovery the last time that there was such a major spike in negative funding rates. This is because whales and institutions may find this as leeway for a leverage liquidation shakedown.
ADA spot flows recorded a spike in outflows by as much as $39.87 million in the last 24 hours. Traders should keep an eye out for a possible large shift which could manifest in the form of a massive spike in spot inflows.
Heavy bullish demand will allow ADA to garner the momentum it needs to finally break out of the megaphone pattern. This outcome could mark the start of the next major bullish wave for the Cardano native coin.
The fact that ADA price did not retest its descending support at the end of February could be a tell-tale sign that the pattern could be at its tail end.
