Cardano is trending lower as the crypto market sees small profits on shorter timeframes. The cryptocurrency continues to move in tandem with Bitcoin and Ethereum and looks set to experience some volatility during today’s trading session.
Related Reading | Dogecoin sees its price double, despite losing 10% in the last 7 days
At the time of writing, Cardano (ADA) is trading at $0.46 with a profit of 2% over the past 24 hours and a loss of 9% over the past week. ADA’s price has given back almost all of the gains it saw during the crypto market relief and stands as the worst performing asset in the crypto top 10 by market capitalization.
Only Solana (SOL) recorded the worst performance with a loss of 18% over the same period. Cardano is reacting negatively to the uncertainty in the crypto market heightened by today’s Federal Open Committee (FOMC) meeting of the US Federal Reserve (Fed).
During this event, the financial institution should announce its interest rate hike. The market expects a rise of 75 basis points (bps).
If there are no surprises, the crypto market could see a potential rebound back to previous levels with a spike in volatility.
Cardano and the Crypto Market See a Spike in Short Positions
As mentioned, the uncertainty around the crypto market could result in price volatility, with no clear near-term direction.
A merchant of pseudonyms said the following on the effect of the FOMC meeting on the sector:
Before the FOMC, there is a huge increase in open interest (total dollar amount of open positions in the futures market). This is accompanied by negative funding rates, which means traders are selling short (…).
The increase in short positions is attributed to speculators betting on a negative reaction to the FOMC. In this sense, the pseudonymous trader is betting on no clear direction after this event.
However, as NewsBTC reported earlier, trading desk QCP Capital has recorded a relief rally over the past month whenever there is an FOMC event. This time should be no different with falling inflation expectations and slowing economic growth indicators.
On short notice, retail investors buy into the current price action of ADA. As seen below, these investors have been buying ADA since May at an increasing rate.
Related Reading | Ripple (XRP) Is Up 190% From Cycle Low, But Will It Ever Reach $3?
The market tends to move in the opposite direction of retail investors, but this time macro conditions could be stronger and exert a greater influence on Cardano’s price.