I noticed an extreme market signal for ADA. Holders who bought in the past year are on average holding an unrealized loss of 43%, but at the same time, short positions are concentrated at their highest level in three years. This combination is similar to a pattern seen in mid-2023, when ADA rose nearly 300% over 18 months from around $0.25.

The data is quite interesting. The weekly funding rate for ADA on a major exchange has become extremely negative since June 2023. This means that short sellers are overwhelmingly dominant. In such situations, when the price starts to rise, a short squeeze is more likely to occur. Liquidations cascade, pushing the price even higher.

Meanwhile, the MVRV ratio has dropped to -43%, indicating that most panic sellers have probably already sold. What remains are those committed to holding or those who have already accepted their losses. In other words, selling pressure is easing.

However, there are caveats. Currently, ADA is trading around $0.24, down 71% from its peak in September. The macro environment is also tough, and there are doubts about whether the Cardano ecosystem is truly growing. So, the same outcome is not guaranteed.

But a bottom signal isn’t about fundamentals; it’s about positioning. Right now, ADA’s positioning is in an extremely extreme state that could catch most traders off guard. The next move is something to watch closely.