The average Cardano holder who bought in the past year is down 43%. The derivatives market is betting that it will get worse. But both of those things happening at once have historically meant the opposite.
Santiment data shows that ADA’s 365-day market capitalization to realized value (MVRV) has fallen to -43%, meaning that wallets that have been active on the Cardano network over the past year have an average loss of 43% on their positions.
The metric lies deep in what Santiment calls the “opportunity zone,” a band that earlier instances in 2023 and late 2024 preceded recoveries as the MVRV average returns toward zero.
MVRV measures the average trading return over a given time frame, and it always pulls back toward 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 either committed to holding or have already accepted the loss. This is the kind of positioning that reduces further selling pressure and sets the stage for a bounce when a catalyst arrives.
At the same time, Binance’s weekly average funding rate for ADA has turned to its most negative reading since June 2023. Funding rates reflect the balance between long and short positioning in perpetual futures. A deeply negative rate means shorts are dominant and are paying long to keep their positions open. In simpler terms, the derivatives market is crowded on the bearish side.
That crowding is what makes it a conflicting signal. When shorts are so concentrated, any positive price movement triggers liquidations that force short sellers to buy back their positions, pushing the price higher, which triggers more liquidations.
The cascade also works in reverse, but the historical pattern on the ADA shows that extreme funding rates of this magnitude have preceded short squeezes more often than they have preceded further declines.
The last time both signals clearly aligned this was mid-2023, when ADA traded around $0.25 before rising around 300% over the following 18 months. However, that doesn’t mean the same outcome is guaranteed, as ADA is down 71% since its peak in September, the broader market is dealing with a war, sticky inflation and no rate cuts in sight, and Cardano’s ecosystem metrics haven’t produced the kind of usage growth that would justify a fundamental repricing.
But bottom signals are not about fundamentals. They are about positioning. And the positioning on Cardano right now, with average holders at -43% returns and shorts at three-year highs, is the kind of setup where the next move catches the majority off guard.
ADA traded at $0.26 on Tuesday, down about 7% on the week.
