Ever since March 20, Cardano’s price has been consolidating within the range of $0.61 to $0.64, failing to keep up with the market average. While other cryptocurrencies like Solana and Avalanche have seen double-digit gains, ADA has been stuck in a sideways movement. The on-chain data trends have been signaling a potential bearish reversal for Cardano, with the blockchain network missing out on key developments like layer-2 gas fee optimization, memecoin popularity, and rising defi activity. This lack of participation in the growing trends has put ADA at a disadvantage compared to its competitors.
One key area where Cardano has been lagging behind is in the defi sector. While Solana has been gaining traction and outpacing Ethereum in trading volumes, Cardano’s smart contract ecosystem has been on the decline. The total value locked (TVL) in Cardano’s defi sector has dropped significantly from $520 million to $409.9 million in just a week, showing a lack of interest in defi services hosted on the network. This decline in defi participation often indicates a bearish outlook for the native token, signaling a decrease in demand and market share for ADA.
According to Santiment’s open interest data, ADA’s open interest in derivatives markets has seen a significant decline of $500 million in the past month. This decrease in open interest suggests that traders are preparing for a more bearish outlook, especially as ADA’s price remains flat and offers limited opportunities for profit. With existing market participants withdrawing $500 million of capital in the past month, Cardano is primed for a significant downswing towards $0.50 by the end of March 2024.
Currently, ADA’s price is hovering just above $0.61, marking a 13% weekly decrease. However, the lower limit of the Bollinger band indicator indicates a major support level at $0.60. If traders continue to close out positions, ADA’s price is likely to break below $0.60 and potentially drop towards $0.55 in the upcoming weeks. For the market sentiment to turn positive again, ADA bulls will need to push the price above the 20-day Simple Moving Average of $0.70.
Cardano’s lackluster performance in key areas like defi participation, declining open interest, and stagnant price action paints a bearish picture for ADA’s future. With growing competition from other cryptocurrencies and a diminishing market share, Cardano faces significant challenges ahead. Traders and investors should be cautious and monitor the market closely to make informed decisions regarding ADA.