Cardano Faces Potential Price Decline Amid Significant DeFi Downturn

Cardano's price has plunged more than 24% from its highest point this year, triggering concerns about a deeper downturn. Key indicators within the decentralized finance (DeFi) sector suggest a bleak outlook for the cryptocurrency.

Key Takeaways

Current Price Drop: Cardano's price recently fell to $0.7736, marking its lowest level since August 12.
DeFi Ecosystem Struggles: The total value locked in Cardano's DeFi sector has decreased to $320 million, a significant drop from the year-high of $680 million.
Lack of New Applications: The absence of major new DeFi projects this year has hindered Cardano's growth compared to other blockchains.
Quiet DEX Trading: The trading volume on decentralized exchanges (DEX) has also diminished, with only $1.4 million processed in the last 24 hours.
Institutional Interest Lagging: Only Grayscale has applied for a spot ADA ETF, contrasting with stronger interest for other cryptocurrencies like Solana and Ripple.

Cardano price to crash

Current Cardano Price Overview

Cardano Cardano's ADA token has dropped to $0.7736, experiencing a decline similar to that of other altcoins, such as Ethereum and Solana. The main driver behind this drop is the underperformance of Cardano's DeFi ecosystem when compared to its competitors.

The total value locked in Cardano's DeFi projects has now reached $320 million, which is considerably lower than its peak of $680 million. Notably, there have been no significant new DeFi applications introduced this year. The most prominent platforms in the Cardano ecosystem include Liqwid, Minswap, and Indigo.

Additionally, despite the passage of the GENIUS Act, Cardano has not seen growth, with its total stablecoin supply declining by 4.4% over the past week, bringing it down to $37 million. This figure is considerably smaller than what newer blockchains like Unichain, Linea, and Plasma are experiencing.

Furthermore, Cardano's decentralized exchange (DEX) environment has shown signs of stagnation, with trading volume dwindling to just $1.4 million in the last 24 hours.

Technical Indicators for Cardano Price

Cardano price ADA price chart | Source: crypto.new

Recent technical analyses indicate a challenging road ahead for Cardano's price in the upcoming weeks. The daily chart displays a rising wedge pattern, which has now broken below its lower boundary, suggesting additional price declines.

Additionally, a head-and-shoulders pattern has formed and has already dipped below its neckline, reinforcing the bearish sentiment. ADA trading has fallen below both the 50-day and 100-day Exponential Moving Averages, a clear indicator that bearish momentum is strong.

The Average Directional Index has reached 22, suggesting that the downtrend is becoming more pronounced. These technical formations imply that the price could potentially drop to the June low of $0.5095, which would mark a decline of approximately 35% from its current level.

In conclusion, Cardano is currently facing significant obstacles that could lead to a further downturn, primarily driven by challenges in its DeFi ecosystem and a lack of new developments. Investors should remain cautious as market conditions evolve.