ADA's bearish intensifies, funding rate turns negative, accompanied by a decline in on-chain indicators

Deteriorating Market Sentiment, ADA’s Challenge to Hold the $0.50 Level

Cardano(ADA) continues to struggle with persistent weakness. Recent data shows ADA spot prices have fallen to around $0.36, representing a significant decline compared to last week. This is beyond simple technical adjustments, as market participants’ psychological discouragement is supporting the downward price movement.

What is more concerning is that bearish sentiment is reflected in both derivatives and on-chain indicators. Especially, the funding rate structure has turned negative, with short position holders paying fees to long position holders to maintain their bets on further declines, vividly revealing the market’s weak confidence in ADA.

Reduced On-Chain Activity, Signs of Ecosystem Demand Contraction

On-chain indicators are also moving in a negative direction. The total value locked (TVL) in the Cardano ecosystem has shrunk to around $240 million, accelerating a gradual decline that has been ongoing since mid-August. This indicates a noticeable decrease in user activity participating in Cardano-based protocols.

Reduced network participation leads to a fundamental decrease in ecosystem demand. As DeFi protocols on ADA see less usage, the utility demand for the token itself also diminishes, creating a vicious cycle.

Furthermore, the open interest (OI) weighted funding rate has fallen to around -0.057%, indicating a clear dominance of short positions. This combination fosters market consensus around “selling at the highs during rebounds” and “continued downtrend.”

Technical Pattern, Testing Major Support Levels

From a chart perspective, ADA faces several challenges. After hitting resistance at the 50% retracement level of $0.61 on Tuesday, it has experienced double-digit declines over four days. The current focus is on whether the daily support level at $0.49 can hold.

If the daily close falls below $0.49, it could be interpreted as the breakdown of the psychological support at $0.50. This may significantly accelerate the downward trend.

Momentum indicators also support the bearish scenario. The RSI remains around 35, well below the neutral 50 level, and the MACD histogram bars are gradually shrinking. These signals suggest the formation of a death cross, indicating that downside pressure is stronger than upward momentum.

Limited Upside Potential Despite Rebound Scenarios

Of course, not all is bleak. If ADA recovers buying interest and reclaims above $0.55, attracting additional demand, it could attempt to challenge the resistance at $0.61 again.

However, given that the funding rate, TVL, and momentum indicators are all aligned in a bearish direction, even if a rebound occurs, significant sell orders around $0.61 are likely to be waiting. Without fundamental improvements in the ecosystem metrics, technical rebounds are expected to be limited.