ADA Open Interest Contracts Surge by 13% - Behind the Scenes: Analyzing the True Bull and Bear Battles in the Crypto Market

The cryptocurrency market has recently experienced intense volatility, with Cardano’s open interest (OI) surging by 13% within 24 hours, sparking market speculation about a short squeeze. However, beneath the surface data, there is a completely different picture.

According to global market data, on January 20th, over 182,000 traders in the entire crypto market faced liquidations, totaling up to $1.08 billion, with the vast majority being long positions. Focusing on Cardano, its price has fallen 14% over the past week and 62% over the past year, indicating a clear long-term downtrend.

01 Market Surface: Divergence Between Surging Open Interest and Weak Prices

Recently, the Cardano derivatives market has sent a notable signal: its open interest rapidly increased from $603.51 million to $841 million, hitting a new monthly high with a significant growth rate. Open interest typically reflects market activity and new capital inflows.

Meanwhile, ADA’s price showed signs of recovery, attempting to retest the key resistance at $0.43. On-chain indicators, such as the funding flow index, previously indicated a divergence where prices declined while buying pressure increased, suggesting some dip-buying activity.

However, this apparent resilience has not reversed the overall bearish trend. From a macro perspective, most altcoins’ daily relative strength indices (RSI) are below 50, indicating the market remains bearish with ongoing selling pressure. ADA’s price failed to break through effectively and has entered another downtrend.

02 Harsh Reality: Overwhelming Long Liquidation Data

Contrary to the “shorts suffering” speculation, the actual liquidation data paints a bleak picture for longs.

On January 20th alone, out of the $1.08 billion liquidated across the global crypto market, only $79.67 million (less than 7.4%) was from short positions, with over 92.6% of liquidation losses coming from long positions. This extreme imbalance clearly reveals the true market forces at play.

Specifically for Cardano, historical data also shows a similar structure. During a previous market decline, ADA’s total liquidation within 24 hours was $1.24 million, of which up to $1.18 million (over 93%) was from leveraged long positions. The ratio of long to short liquidations reached an astonishing 1303%.

On major trading platforms like Gate.io, the concentration of long positions in derivatives markets has been high. For example, Binance’s ADA/USDT perpetual contract’s accumulated long liquidation leverage once reached $26.66 million, far exceeding the $14.11 million in short liquidation leverage, with long exposure about 89% higher than short. This “one-sided” bullish betting, when the market reverses, can accelerate the collapse of longs.

03 Deep Analysis: Market Structure Fragility and Capital Shift

Why do open interest and leveraged longs remain high despite weak prices? This reveals the fragility of the current market structure.

The key reason lies in structural changes among market participants. On-chain data shows that long-term holders of Cardano are increasing token distribution, transferring chips to short-term traders. This indicates that the capital supporting the market is shifting from patient long-term investors to speculative short-term traders.

Over 60% of ADA’s on-chain supply is currently “underwater” (bought at a higher price than the current price). While this may temporarily reduce selling pressure, it also suggests that any price increase could trigger panic selling, increasing volatility.

This capital shift weakens the sustainability of price support. Short-term traders are more engaged in swing trading rather than long-term conviction, making rebounds less solid. Meanwhile, negative funding rates indicate that derivatives traders are willing to pay to hold short positions, further reflecting bearish market sentiment.

04 Technical Outlook: Key Levels and Future Path

From a technical analysis perspective, Cardano is at a critical crossroads, with its future movement depending on several clear price zones.

Key support and resistance levels:

The long-term outlook for ADA is closely tied to ecosystem development. In 2026, Cardano plans major upgrades including the Intra-Era Hard Fork, with a community-voted allocation of $70 million to develop infrastructure such as stablecoins and cross-chain bridges, aiming to address ecosystem shortcomings.

05 Rational Outlook: Recognizing Risks and Opportunities Amid Volatility

For investors and traders, the current Cardano market presents a complex environment of high volatility and high risk.

Signals from the derivatives market are crucial. The surge in open interest combined with extreme long liquidations forms a risk profile that warrants caution. It indicates high leverage and concentrated positioning, which can trigger chain reactions of liquidations and deepen declines if prices move against expectations.

Effective risk management is more important now than chasing gains. Traders should closely monitor the key support levels and control leverage to avoid being caught in a “long and short” squeeze during sharp fluctuations.

Although short-term pressure persists, some analyses suggest that from a multi-year cycle perspective, Cardano is still in a broad consolidation phase building a bottom. Price forecasts for 2026 generally cluster between $0.40 and $0.65. Major price breakthroughs will likely require more definitive ecosystem breakthroughs or a return to a broader crypto bull market.

Future Outlook

The surge in Cardano’s open interest is not necessarily a bullish signal but more a reflection of intensified derivatives market speculation amid falling prices.

When over $10.8 billion of long leverage evaporates instantly across the global market, and ADA’s long-to-short liquidation ratio reaches an astonishing 1303:1, it serves as a clear reminder to every market participant: in the high-volatility world of cryptocurrencies, understanding the real forces behind the data and being wary of overly concentrated leverage bets are the first lessons for survival and growth.