The average Cardano holder who has purchased in the past year is down 43%. The derivatives market is betting the situation gets worse. But these two simultaneous phenomena have historically meant the opposite.
Data from Santiment shows that ADA’s 365-day market value to realized value (MVRV) ratio has fallen to -43%, meaning that wallets that have been active on the Cardano network over the past year are experiencing an average loss of 43% on their positions.
The metric is deeply rooted in what Santiment calls the “opportunity zone,” a band that historically, in 2023 and late 2024, preceded recoveries as the MVRV average moved back toward zero.
MVRV measures average trading returns over a period of time, and it always returns 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 committed to keeping it or have already accepted the loss. This is the kind of positioning that reduces additional selling pressure and creates the conditions for a rebound when a catalyst arrives.
At the same time, Binance’s average weekly funding rate for ADA became its most negative level since June 2023. Funding rates reflect the balance between long and short positioning on perpetual futures contracts. A deeply negative rate means that shorts are dominant and paying longs to keep their positions open. In simpler terms, the derivatives market is quite bearish.
This crowd is what makes it a contrarian signal. When short selling is this concentrated, any positive price movement triggers liquidations which force short sellers to repurchase their positions, which pushes the price higher, which triggers more liquidations.
The waterfall also works in reverse, but ADA’s historical trend shows that extreme funding rates of this magnitude have preceded short squeezes more often than further declines.
The last time the two signals clearly aligned was in mid-2023, when ADA was trading around $0.25 before rallying around 300% over the next 18 months. That doesn’t mean the same outcome is guaranteed, though, as ADA is down 71% since its September peak, the market as a whole is facing war, persistent inflation, and no rate cuts in sight, and Cardano’s ecosystem metrics haven’t produced the kind of usage growth that would warrant a fundamental price overhaul.
But the underlying signals are not about fundamentals. It’s about positioning. And the current positioning on Cardano, with average holders at -43% yield and shorts at a three-year high, is the kind of setup where the next move catches the majority off-guard.
ADA was trading at $0.26 on Tuesday, down about 7% for the week.
