The last few weeks have not been kind to Cardano (ADA) investors, as the price of the cryptocurrency has been stuck within a narrow range of $0.61 to $0.64. While other cryptocurrencies like Solana (SOL) and Avalanche (AVAX) have seen significant price gains, Cardano seems to have missed out on the party. This lackluster performance has been attributed to a variety of factors, including a decline in defi activity and a bearish outlook for the token.
One of the major reasons behind Cardano’s poor performance is the decline in defi activity on the network. While other projects like Solana have seen a surge in defi trading volumes, Cardano’s smart contract ecosystem has lagged behind. According to DefiLlama’s total value-locked trends, Cardano’s TVL has dropped from $520 million to $409.9 million in just one week. This decline in defi participation is a clear indicator of a bearish outlook for the token.
Another factor contributing to Cardano’s downward spiral is the decrease in speculative interest in the cryptocurrency. Santiment’s open interest data shows that the total value of active futures contracts on Cardano has declined by $500 million over the past month. This drop in open interest is a clear signal that traders are preparing for a more bearish outlook on the token. As trading opportunities become limited due to the flat price action of ADA, traders may start liquidating their positions, leading to a further decline in price.
From a technical analysis standpoint, Cardano’s price is currently hovering around $0.61, down 13% weekly. The lower limit of the Bollinger band indicator suggests a major support level at $0.60, but if traders continue to close out positions, ADA prices may break below $0.60 and head towards $0.55 in the coming weeks. To reverse the negative trend, ADA bulls will need to push the price above the 20-day Simple Moving Average of $0.70.
Cardano’s recent price performance has been less than ideal, with the cryptocurrency facing a multitude of challenges ranging from declining defi activity to reduced speculative interest. As the market sentiment turns increasingly bearish, it is imperative for Cardano to address these issues and regain investor confidence to avoid further price declines in the future. Only time will tell if ADA can bounce back from its current predicament or if it will continue on its downward trajectory.