Short sellers have been increasing their bets against both Cardano ($ADA) and the native XRP token Ledger ($XRP) in a potential positive development for long-term investors as liquidated short positions may help boost the prices of these cryptocurrencies.
This is according to on-chain analytics firm Santiment, which noted in a post on microblogging platform September 2023 for ADA and May 2024 for XRP.
The finding comes as investors look for a revival of the cryptocurrency market, with ADA and XRP emerging as two altcoins seeing a surge in short positions following a recent price surge. In short selling, traders borrow an asset, sell it, and aim to buy it back later at a lower price to pocket the difference.
Earlier this week, Santiment's analysis identified both ADA and XRP as potentially undervalued. The Market Value to Realized Value Ratio (MVRV), which compares the market capitalization of an asset to the total realized value of all its coins in circulation, indicated that ADA could be extremely undervalued and have "mild bullish conditions" for XRP. Historically, low MVRV ratios have been followed by price rallies as undervalued assets attract renewed buying interest.
Market analysts also echo Santiment's optimistic outlook, particularly for XRP and Cardano. A pseudonymous analyst named Cryptobilbuwoo shared a weekly chart-based analysis suggesting a correlation between XRP price movements and altcoin (ALT.D) dominance.
Also read: AI Prediction: XRP ($XRP) vs. Cardano ($ADA) likely to be the best buy for the rest of 2024
Their analysis suggests that every time ALT.D retests an ascending trend line, XRP tends to rise, positively impacting the entire altcoin market. According to its technical analysis, XRP could rise to $2.71, which means an imminent technical rebound.
Meanwhile, analysts suggest that Cardano price could recover soon and its current price level is โan incredible opportunityโ to dollar-cost average (DCA) on the cryptocurrency as its price trends lower.
Featured image via unpack.
