• Cardano is down 4% on Monday, breaking below its short-term support trendline.
• Derivatives data shows a sudden increase in bearish interest as the funding rate drops below 0.010% amid declining Open Interest.
• The technical outlook for Cardano is bearish, putting focus on the $0.2500 crucial support level.

Cardano (ADA) is down 4% at press time on Monday, entering its third consecutive day of decline. Bearish bias in Cardano’s derivatives market positional buildup aligns with rising pressure on the broader cryptocurrency market amid US President Donald Trump's reassessment of global tariffs and domestic conflict with the US Supreme Court. The technical outlook for Cardano remains bearish, putting a crucial support level to the test.

Cardano under pressure as shifting macroeconomics weigh on the crypto market

Cardano continues to lose retail demand after a volatile week and braces for further losses amid a broader market correction driven by resurfacing US tariff complications. 

CoinGlass data shows that the ADA futures Open Interest (OI) stands at $424.84 million, down 4.25% over the last 24 hours, suggesting significant capital withdrawal amid risk-off sentiment among traders. 

The capital outflow aligns with the $1.86 million in total liquidation over the last 24 hours, mainly driven by the forced liquidation of long positions. This reinforces the bearish bias and lowers the long-to-short ratio to 0.8619, suggesting a greater number of active short positions. 

Additionally, the funding rate has dropped to -0.0138%, indicating heightened interest among traders in holding short positions. Generally, a funding rate below -0.010% reflects unsustainable levels of selling pressure, encouraging long-side buildup to capitalize on the funding rate incentive paid to bulls.

Technical outlook: Will Cardano decline below $0.25?

Cardano remains under bearish pressure, extending its decline by 4% at the time of writing on Monday, after breaking the short-term support trendline that connected the February 11 and February 19 lows. 

Cardano trades beneath the descending 50-period Exponential Moving Average (EMA) at $0.2773 and the 200-EMA at $0.3013, maintaining a bearish tone. The 50-period EMA remains below the 200-period EMA, reinforcing downside pressure.

The declining trend approaches the 50% retracement level at $0.2593, measured from the February 3 high of $0.3050 to the February 6 low at $0.2289 on the 4-hour chart, as previously anticipated by FXStreet. 

A decisive close below this level could test the 38.2% Fibonacci retracement level at $0.2496, which serves as the last line of defense before the February 6 low at $0.2205. 

The Relative Strength Index (RSI) is at 30 on the daily chart, testing the oversold boundary after the steady decline, indicating a surge in selling pressure. At the same time, the Moving Average Convergence Divergence (MACD) is in a free fall below the zero line as negative histograms widen, reaffirming the increase in bearish momentum. 

On the flip side, if Cardano resurfaces above 61.8% Fibonacci retracement level at $0.2695, it could test the 50-day and 200-day EMAs at $0.2773 and $0.3013, respectively.

(The technical analysis of this story was written with the help of an AI tool.)