Predicted cost:
Cardano’s price has remained stable between $0.61 and $0.64 since March 20, with indicators suggesting a potential bearish reversal for ADA.
While Cardano has experienced a sideways price movement this week, other cryptocurrencies like Solana (SOL) and Avalanche (AVAX) have seen double-digit price gains.
On-chain data trends reveal the underlying bearish catalyst for ADA’s lackluster performance.
Cardano has been absent from major market themes such as layer-2 gas fee optimization, memecoin hype, and the rise of decentralized finance (defi) activity.
Solana has received recognition in the defi sector for surpassing Ethereum in trading volumes, while Cardano’s smart contract ecosystem has declined.
Total value locked (TVL) data from DefiLlama shows that Cardano’s TVL decreased from $520 million on March 14 to $409.9 million on March 22, a significant decline compared to Solana’s TVL, which grew by over $200 million during the same period.
This decline in defi participation on the Cardano network suggests a bearish outlook for the ADA token, indicating a decrease in demand for defi services offered by the network.
The absence of defi traction on Cardano has played a crucial role in the current ADA price pullback.
Additionally, data from Santiment reveals that ADA’s open interest in the derivatives markets has decreased by $500 million over the past month, further contributing to the bearish sentiment.
The decline in open interest during a price consolidation phase indicates that traders are preparing for a more bearish market.
Moreover, ADA’s stagnant price action limits opportunities for traders to profit from significant market fluctuations, leading to the potential liquidation of more positions in the future.
Considering the low demand for defi and the significant capital outflows of $500 million in the past month, Cardano’s price is likely to experience a significant downward movement towards $0.50 by the end of March 2024.
Currently, ADA’s price is hovering just above $0.61, showing a 13% weekly decrease. However, the Bollinger band technical indicator suggests a strong support level at the psychological support of $0.60.
If traders continue to close out positions, ADA’s price may break below $0.60 and decline further towards $0.55 in the coming weeks.
To regain positive momentum, ADA bulls will need to push the price above the 20-day Simple Moving Average price of $0.70.
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