I've been diving into the crypto scene lately, and one thing that's caught my eye is Cardano (ADA). This past week, ADA has seen quite the jump—over 38% in just 24 hours! But as I looked deeper, I realized this surge isn't just a random occurrence. It's all about those liquidation levels in the crypto exchange market. Let me break it down for you.

The Liquidation Game

First off, what are liquidation levels? In simple terms, they’re points where traders who have bet against a cryptocurrency (by going short) get forced to close their positions because the price is moving against them. And when they do that? They buy back the crypto they borrowed, pushing the price even higher.

In ADA's case, over $57 million in Bitcoin shorts were liquidated recently, contributing to a total of $180 million across the board. It’s like a domino effect—one liquidation leads to another as prices climb.

As ADA's price went up, so did the open interest on futures contracts. That’s basically an indicator that more people are betting on ADA (whether long or short). The dense color bands around $0.40 to $0.45 show where most liquidations happened during this spike. If ADA can hold above these levels, we might see even more upward movement.

External Factors at Play

But here’s where it gets tricky: external economic factors play a huge role too. Things like inflation and monetary policy can make cryptocurrencies more appealing in some countries while creating chaos in others. Digital currencies can lower transaction costs but also raise risks of financial contagion.

And let’s not forget about regulation! The wild west nature of crypto right now—with its lack of clear rules—can lead to instability. Just look at how quickly things can turn sour without proper oversight.

Stablecoins vs Non-Stable Cryptos

Now let's talk about stablecoins for a second. These things are designed to keep their value steady—like being pegged to good ol' US dollars or other fiat currencies. They serve as a safe haven during turbulent times.

ADA and other non-stable cryptocurrencies? They're like roller coasters—fun but risky if you're trying to maintain your purchasing power!

So there you have it: Cardano's recent surge is fascinating but also shows how interconnected everything is in the crypto world—from liquidation levels to external economic factors and even stablecoins acting as counterweights to volatility.