Cardano (ADA) investors experienced significant challenges last week as token prices plummeted. In contrast, the DeFi sector saw a surge in interest, marked by a notable increase in the daily volume of Cardano’s decentralized exchange (DEX), which surpassed 23 million ADA.
Why Is Cardano’s TVL Dropping?
Despite the rise in DEX activity, Cardano’s total value locked (TVL) fell sharply from $430 million to $230 million, according to data from Artemis. This decline indicates a waning interest in decentralized applications (dApps) on the Cardano network. Additionally, the network’s non-fungible token (NFT) transactions suffered, with a significant reduction in both floor prices and overall transaction volume last month.
The diminishing interest in Cardano’s ecosystem could pose a substantial threat to the protocol and further impact ADA’s price movements negatively. Currently, ADA is trading at $0.4489, having shown a series of lower lows and highs in recent weeks. The token fluctuated between $0.512 and $0.421, with the $0.512 resistance level being frequently tested.
What Is the Technical Outlook for ADA?
Should ADA retest and breach the $0.512 level again, there might be a potential reversal in price. However, current data does not favor a bullish trend. The relative strength index (RSI) for ADA fell sharply, signifying a decline in bullish momentum. Furthermore, the Chaikin Money Flow (CMF) for Cardano also took a downturn.
Key Inferences for Investors
– ADA’s price is currently in a downtrend with lower lows and highs.
– TVL decline suggests reduced interest in Cardano’s dApps.
– NFT transaction volume and floor prices on Cardano are falling.
– RSI and CMF indicators for ADA show bearish tendencies.
– ADA’s transaction frequency and MVRV ratio are decreasing.
– Fewer long-term holders are retaining ADA, as indicated by the Long/Short ratio.
In conclusion, Cardano (ADA) is experiencing a tough period despite increased DeFi interest. Diminishing ecosystem engagement could pose long-term challenges unless addressed promptly.
