The average Cardano holder who bought last year is down 43%. The derivatives market is betting that it will get worse. But the fact that both things happen at the same time has historically meant the opposite.
Data from Santiment shows that ADA’s 365-day market value to realized value (MVRV) ratio has fallen to -43%, meaning that wallets that have been active on the Cardano network over the last year have an average loss of 43% on their positions.
The metric lies deep in what Santiment calls the “opportunity zone,” a band where earlier instances in 2023 and late 2024 preceded recoveries as the mean MVRV returns to zero.
MVRV measures average trading returns over a given time period and always returns to zero over time. When it is extremely negative, the holders most likely to panic sell have already sold.
The remaining supply is in hands that are committed to maintaining them or have already accepted the loss. That is the type of positioning that reduces further selling pressure and creates the conditions for a rebound when any catalyst arrives.
At the same time, Binance’s weekly average funding rate for ADA has reached its most negative reading since June 2023. The funding rates reflect the balance between long and short positioning in perpetual futures. A deeply negative rate means that shorts are dominant and pay longs to keep their positions open. In simpler terms, the derivatives market is crowded on the bearish side.
That crowding is what makes it a contrary signal. When shorts are so concentrated, any positive price movement triggers liquidations that force short sellers to buy back their positions, driving up the price and causing more liquidations.
The cascade also works in reverse, but the ADA’s historical pattern shows that extremes in funding rates of this magnitude have preceded short squeezes more often than new declines.
The last time both signals clearly aligned was in mid-2023, when ADA was trading around $0.25 before recovering roughly 300% over the next 18 months. However, that doesn’t mean the same outcome is guaranteed, as ADA is down 71% from its September peak, the broader market is dealing with a war, persistent inflation and no rate cuts in sight, and Cardano ecosystem metrics have not produced the kind of usage growth that would justify a fundamental price overhaul.
But the underlying signals have nothing to do with fundamentals. It’s about positioning. And the positioning on Cardano right now, with average holders holding returns of -43% and short selling at a three-year high, is the kind of setup where the next move catches most off guard.
ADA was trading at $0.26 on Tuesday, down about 7% on the week.
