Cardano ADA Soars 88% - Is This Just the Beginning?
From November 18 to December 3, the price of Cardano's ADA skyrocketed by 88.8%, reaching nearly a three-year high of $1.33. This surge has benefitted the entire altcoin market, with the market cap on December 3 hitting $15.2 trillion, significantly higher than on November 18.
The insane rise of ADA over these 15 days also pushed the leverage positions in futures contracts to a historical high. Traders are pondering whether the drop to $1.16 on December 3 was a good buying opportunity, while also worrying about the risks of chain liquidations.
During this time, altcoins like Algorand and IOTA have also performed well, with some calling this a “dinosaur coin rebound.” As for Cardano, not only has the price surged, but the open interest of ADA in derivatives exchanges has increased by 37%, surpassing the levels seen in October 2022. By December 3, the total exposure of long (buyers) and short (sellers) positions combined reached 932.5 million ADA, equivalent to $1.2 billion.
Interestingly, although the market cap of BNB Chain is more than twice that of Cardano, the total open interest in BNB futures contracts is still less than that of Cardano. Open interest in altcoins like Solana, Dogecoin, and Avalanche is also not as high as before.
As for ADA futures, they currently appear optimistic yet cautious, with low liquidation risks. Demand for futures is rising sharply, but that doesn't necessarily indicate a bullish trend, as both buyers and sellers have corresponding positions. To gauge traders' sentiment, it's essential to closely monitor the premiums of monthly futures contracts, which reflect the benchmark interest rate. In a healthy market, the annualized premium typically ranges between 5% and 10%.
Cardano's monthly futures contracts have consistently been about 17% higher than the spot ADA price, reflecting a healthy premium similar to previous bull markets, which is not unusual. However, if the optimism becomes excessive, bulls may face annualized costs of up to 60% for leverage, which is no laughing matter.
Looking ahead, I will guide everyone to aim for lucrative opportunities in altcoins, especially those with significant potential, where a tenfold return is entirely feasible. If you want to make big money in a bull market, like and comment to join me in strategizing for the entire bull market!
