Ever since March 20, Cardano’s price has been relatively stagnant, ranging from $0.61 to $0.64. This lack of movement is in stark contrast to other cryptocurrencies such as Solana (SOL) and Avalanche (AVAX), which have experienced significant price gains. The on-chain data trends point towards a bearish catalyst behind Cardano’s underperformance in the market.
One of the key factors contributing to Cardano’s lackluster performance is the decline in its defi sector. While Solana has seen a surge in defi trading volumes, Cardano’s smart contract ecosystem has suffered a decline. For instance, according to DefiLlama’s total value-locked trends, Cardano’s TVL has decreased from $520 million to $409.9 million over the past week. In comparison, Solana’s defi TVL has grown by over $200 million during the same period.
Another worrying sign for Cardano is the decline in speculative trading activity. Data from Santiment indicates that ADA’s open interest in the derivatives markets has dropped by $500 million over the past month. This decrease in open interest suggests that traders are adopting a more bearish outlook on ADA’s price. Additionally, the flat price action of ADA limits opportunities for traders to profit from market fluctuations, further adding to the bearish sentiment.
Based on the current market conditions and trends, it seems likely that Cardano’s price will experience a significant downswing towards $0.50 by the end of March 2024. The current price of ADA is hovering just above $0.61, down 13% weekly. If traders continue to liquidate their positions, ADA’s price could potentially break below $0.60 and drop towards $0.55 in the upcoming weeks.
From a technical standpoint, the lower limit of the Bollinger band indicator indicates a major support level at $0.60. However, if ADA’s price continues to decline, it could breach this support level and move towards $0.55. In order 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.
The current market indicators point towards a bearish outlook for Cardano. The decline in defi activity, speculative trading behavior, and overall market sentiment suggest that ADA’s price may continue to trend downwards in the near future. Investors and traders should be cautious and closely monitor the movement of ADA to make informed decisions.
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