Odds of a big rally for Ethereum (ETH) rival Cardano (ADA) and two other altcoin projects are rapidly increasing, according to the crypto analytics firm Santiment.
Santiment reports that ADA, fan engagement token Chiliz (CHZ) and ETH rival Fantom (FTM) are facing negative funding rates, setting the stage for short squeezes.
[adinserter block="1"]“When selecting altcoins, pay attention to those being bet against (shorted) by other crypto traders. When funding rates on large exchanges get heavily in negative range, like we see with Chiliz, Fantom and Cardano, there are increased chances of liquidations leading to pumps.”
According to Santiment’s chart, the last time these three projects experienced similar negative funding rates in April and May, the tokens bounced back and put up double-digit gains.
Funding rates represent traders’ sentiment in the perpetual swaps market, and the amount is proportional to the number of contracts. Negative funding rates indicate that short-position traders are dominant and are willing to pay long traders.
A short squeeze happens when traders who borrow an asset at a certain price in hopes of selling it for lower to pocket the difference are forced to buy back the assets they borrowed as momentum moves against them, triggering further rallies.
ADA is trading for $0.39 at time of writing, down more than 5% in the last 24 hours. Meanwhile, Chiliz is trading for $0.0663 at time of writing, down 5.7% on the day, and Fantom is trading for $0.43 at time of writing, down 11% in the last 24 hours.
Santiment also says that crypto markets may be on the verge of breaking out based on an increasing amount of digital asset chatter on social media platforms.
“Crypto discussion rates are finally looking up, particularly on Telegram, Reddit and X. With social volumes rising, bulls are hoping to see overall network activity rising soon as a result, leading to more utility and higher prices around the corner.”
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