Cardano (ADA) derivatives traders seem confident that the altcoin’s price will soon recover much of its recent losses, according to data obtained by BeInCrypto from Coinglass.

ADA, like many cryptocurrencies, has faced challenges over the past few days, currently trading at a seven-day low of $0.35. Despite the underwhelming market conditions, these traders appear unfazed. The question remains: Will their optimism prove to be the right call?

Confidence in Cardano Recovery Hit Extreme Heights

According to data from the derivatives information portal Coinglass, the 4-hour Long/Short ratio for Cardano (ADA) currently stands at 2.91. The Long/Short ratio measures the buying volume (longs) relative to the selling volume (shorts) on futures contracts.

This ratio provides insight into market sentiment among traders. A ratio below 1 indicates bearish sentiment, while a value above 1 suggests that more traders are taking long positions, expecting the price to rise.

For Cardano, the current ratio indicates that nearly 75% of traders holding ADA-related contracts expect the price to rebound, while only 25% anticipate another decline. This strong bias toward long positions reflects optimism among traders that ADA will recover from its recent downturn.

Read more: 9 Best Blockchain Protocols To Know in 2024

Cardano Long/Short Ratio. Source: TradingView

However, it’s not just traders in the derivatives market who are optimistic about ADA’s potential recovery. On-chain data from IntoTheBlock suggests that ADA holders are also confident that the altcoin will regain its losses.

To provide context, BeInCrypto examines the Coins’ Holding Time, a metric that tracks how long a cryptocurrency has been held without being sold or transacted. When this metric decreases, it indicates that holders are selling.

In ADA’s case, the Coins Holding Time has increased by 64% over the past seven days and by an impressive 103% over the last 30 days. This rise suggests that holders are maintaining their positions, which could help stabilize ADA’s price and prevent another downturn — barring any unforeseen negative developments in the market.

Cardano Coins Holding Time. Source: IntoTheBlock

ADA Price Prediction: Bulls Need to Defend Key Support

While Cardano’s price has dropped 15% since Saturday, the Moving Average Convergence Divergence (MACD) indicator suggests that relief might be on the horizon. The MACD is a technical oscillator that helps traders identify buying and selling trends and gauge momentum.

A negative MACD indicates bearish momentum, while a positive reading signals bullish momentum. In Cardano’s case, the positive value of the MACD, despite the recent price decline, suggests a bullish divergence. If this divergence holds, it could precede a price increase.

However, there are crucial levels to monitor. For ADA to confirm the bullish outlook, it needs to stay above $0.34. If it fails to do so, a deeper correction to $0.31 could occur. On the other hand, if bulls defend the $0.34 region, ADA could start an upward move toward $0.39 in the short term.

Read more: Cardano (ADA) Price Prediction 2024/2025/2030

Cardano Daily Analysis. Source: TradingView

Meanwhile, a significant price decrease could spark massive long liquidations and potentially drive a long squeeze. For those unfamiliar, a long squeeze happens when traders expecting a price increase are forced to sell to prevent further losses.