Key Insights:
- Cardano’s ADA price has fallen over 50% since August, and technical patterns suggest more downside.
- DeFi TVL on Cardano has dropped significantly, from $616 million to $261 million, signaling weak fundamentals.
- Cardano’s decentralized exchange activity has decreased sharply, with daily volumes falling from $12 million to $1.6 million.
Cardano’s ADA token has experienced a sharp decline in recent months, trading at $0.5610 as of November 13. This marks a significant drop of over 50% from its August high of $1.0193. The downward trend has been accompanied by a concerning technical pattern, signaling potential further losses for Cardano investors. ADA has fallen below both its 50-day and 200-day Exponential Moving Averages (EMAs), forming a bearish crossover known as a “death cross.” This signal is often viewed as a sign of additional downside potential.
In addition to the death cross, Cardano has also developed a classic inverse cup-and-handle pattern, which is commonly associated with bearish market continuation. This pattern consists of a rounded top (the cup) followed by a brief consolidation (the handle). Analysts suggest that the next price target for ADA could be as low as $0.2532, representing a decline of approximately 55% from its current position. This forecast stems from measuring the distance between the high and low of the cup, then applying the same distance downward from the cup’s base.
Weak DeFi Activity Reflects Cardano’s Struggles
While technical indicators point to further downside, Cardano’s fundamentals are also concerning. The network’s Total Value Locked (TVL) has dramatically decreased, dropping from $616 million in November 2023 to just $261 million today. The decline is consistent across all DeFi protocols built on the Cardano network, including Liqwid, Minswap, and Indigo. Additionally, the market share of Cardano’s stablecoin, Djed, remains minimal with a market cap of just $18.9 million. This low adoption of its DeFi products indicates waning interest from developers and users, further contributing to the bearish outlook.
The lack of investor confidence is further evidenced by the diminishing activity on Cardano’s decentralized exchanges (DEXs). The daily trading volume on DEXs has dropped sharply to just $1.6 million, down from a peak of $12 million earlier in the month. Active addresses on the Cardano network have also declined significantly, now standing at 238,000, compared to 616,000 a year ago. These figures reflect a decline in user engagement, which presents a substantial challenge to Cardano’s growth prospects in the near term.
Hope for Recovery Rests on Upcoming Midnight Sidechain
Despite these challenges, Cardano’s development team, led by Charles Hoskinson, is pinning its hopes on the upcoming Midnight sidechain to rejuvenate its ecosystem. Midnight is expected to bring new partnerships and potentially drive more developer and user activity. However, it remains to be seen whether this sidechain can deliver the necessary momentum for Cardano to reverse its current downtrend.
