Cardano’s $1B futures open interest shows ADA is a serious contender

Cardano’s $1B futures open interest shows ADA is a serious contender

Cardano (ADA) has had an impressive start to the year as it broke through the psychological $1 barrier and made an all-time high at $1.50. The impressive 590% year-to-date gain took place as the network transformed into a multi-asset network, similar to Ethereum, and this could bode well for Cardano’s future.

Cardano price at Binance, USDT. Source: TradingView

The rally’s final leg seems to be related to the Coinbase Pro listing, announced on March 16, and this resulted in a renewed push to $1.47 on March 18.

As Cardano’s price increased, so did its spot trading volume and on-chain transfers, which surpassed Litecoin (LTC). The increased interest from investors also caused Cardano’s futures contracts open interest to increase by five-fold in 2021.

Cardano futures aggregate open interest. Source: Bybt

Make no mistake, breaking the $1 billion open interest barrier is a feat that only (BTC) and Ether (ETH) have achieved. Moreover, Ether held a $2 billion open interest just three months ago.

Therefore, to truly understand if Cardano really deserves the third position in the market capitalization ranking, one should compare its spot volume and on-chain metrics against other altcoins.

ADA trading volume and on-chain metrics strengthen

Regardless of the price movement, low trading activity reflects a small user base or a lack of new entrants. Therefore, one should expect Cardano’s volume to be among the top 5.

Top 10 crypto year-to-date trading volume, USD. Source: Nomics

According to Nomics transparent exchange volume, ADA had a $97.5 billion trading volume in 2021, surpassing Polkadot (DOT), Ripple (XRP), and Litecoin.

Although this is promising, one should also dig into on-chain metrics to understand if futures open interest and spot volume reflect this network activity.

Daily active addresses provide a more detailed view on network usage. However, this data cannot be trusted blindly. The higher the fees, the fewer incentives there are to inflate the number.

Daily active addresses, 14-day average. Source: CoinMetrics

Cardano definitively seems to be decoupling from other altcoins, reaching 85,000 daily active addresses. Moreover, there appears to be no indication of fabricated numbers as its growth path seems organic and in line with the volume activity.

To confirm whether those addresses have been active, one should assess transfers and transactions or the total amount of value effectively circulating on each network.

Transfers and transactions (USD) 14-day average. Source: CoinMetrics

This time around, Cardano’s strength is shown in full as the network daily transfers and transactions average $4.5 billion per day. That amount is at least six times higher than the remaining competitors. Therefore, ADA’s on-chain activity provides some support for the $45 billion market capitalization.

VORTECS™ data from Cointelegraph Markets Pro also began to detect ADA’s bullish outlook on March 16, before the recent price rise.

The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements, and Twitter activity.

VORTECS™ score vs. ADA price (white). Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ score registered a high of 66 on March 16, twelve hours before the Coinbase listing announcement. The cryptocurrency then hiked to $1.23, an 18% gain since the signal arose.

Volumes and on-chain data are important metrics, but Cardano might have a short window of opportunity to take advantage of challenges caused by congestion on the Ethereum network. ADA price might recede unless actual use cases that involve decentralized applications or interconnectivity bridges that work to solve the decentralized finance scaling problem.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.