Cardano (ADA) currently stands at 0.6420 USD, and its investors are on high alert as technical indicators predict a possible 20% decline. The dropping Total Value Locked (TVL) in the Cardano ecosystem and stagnant transaction volumes exacerbate the situation, raising red flags for stakeholders monitoring these dynamics closely.
Is ADA on the Verge of a Major Downturn?
Signs from ADA’s daily chart are not encouraging, revealing a slide from 1.0196 USD in August to its current price of 0.6330 USD. The breach of a crucial support level at 0.6858 USD on October 10 signifies a potential bearish trend. Analysts are watching for a ‘death cross’ as the 50-day and 200-day moving averages edge closer. With indicators such as the Supertrend turning red and both RSI and PPO heading downward, a bearish pennant could drive ADA to an intra-year low near 0.5085 USD.
Are Declining TVL and User Activity Impacting Cardano’s Network?
Ecosystem metrics paint a worrying picture for Cardano. DeFi analytics highlight a 20% reduction in TVL within the past month, now resting at 291 million USD. From its 2023 peak, this marks a fall of over 40%. Several issues are evident, including a lack of established stablecoins, dwindling user activity, and low decentralized exchange (DEX) transaction volumes.
For context, Cardano-based DEXs recorded a mere 1.53 million USD in 24-hour trading volume, significantly lagging behind rivals that enjoy billions in transaction volumes. Charles Hoskinson, the founder of Cardano, remarked that bridging DeFi gaps by tapping into Bitcoin DeFi and tokenized real-world assets could elevate TVL significantly.
However, achieving these ambitious targets remains elusive, suggesting Cardano is trailing its competition. A concerted focus on strategic initiatives is paramount.
The tightening pressure on ADA’s price is intertwined with these ecosystem vulnerabilities, posing sizeable risks to investors. While Cardano has not abandoned its long-term initiatives, including projects like Midnight, meaningful progress demands time, investment, and user participation. For now, stakeholders should keep an eye on the 0.5085 USD mark as a potential low, while any breakout above 0.80 USD could signal renewed hope. Nonetheless, caution prevails based on current assessments.