Cardano Price Might Be Falling, But On-Chain Metrics Tell A Different Story

Cardano investors haven’t had a fun past few months, but on-chain metrics are telling us that the smart contract platform is due for a reversal.

Covered:

Cardano On-Chain Metrics
ADA Price Update

The crypto markets have had a volatile past couple of months, and Cardano (ADA) has been feeling the burn ever since its release of smart contracts in September 2021. Despite the red downtrend that ADA is caught in, however, on-chain metrics are pointing towards an impending reversal.

Cardano On-Chain Metrics

Upon the highly-anticipated launch of the SundaeSwap decentralized exchange (DEX), the Cardano blockchain was fully woken up, allowing users to onboard and begin swapping tokens, staking, adding to liquidity pools, etc. Prior to this point, Cardano has relatively quiet, with just a handful of developers putting in work for their projects behind the scenes.

As highlighted by the blockchain data tracker DeFiLlama, Cardano’s total value locked (TVL) has boomed in the last month, ballooning by over 81% to a current TVL of $255 million, with nearly half of the TVL being tied up in SundaeSwap.

Along with a rapidly growing TVL, Cardano is also blowing up in all different sorts of user metrics.

Let's take a look at our February roundup of #Cardano on-chain stats. 📊

👆 A positive increase in key stats is showing strong progress for the protocol and a nice uplift in single pool delegation supporting the decentralization of the network. https://t.co/EbbD4ZXd2z pic.twitter.com/p9Dj74UD2K

— Cardano Community (@Cardano) March 1, 2022

I think the most notable increase here is the 41% rise in the number of Plutus Scripts over the last month. These scripts are indicative of healthy development activity, a key metric that you want to see grow — it tells you that people are building on the platform.

ADA Price Update

Although on-chain metrics are looking bright right now, the price tag hasn’t been looking so good. Cardano is getting ready to print its seventh straight red month; at the time of writing, ADA is trading at $0.83.

From the monthly chart, it’s obvious that the blockchain has lost its momentum since the release of smart contracts. Looking at the glaring bear case, a failure to hold around current levels could spell disaster in the short term, sending ADA back down to that green 50-month estimated moving average (EMA), which currently sits at $0.52.

On the flip side of things, I wouldn’t look at this downtrend as all bad — it’s created a wide-open opportunity for new flocks of users to onboard the DeFi ecosystem. And with the passionate fanbase that Cardano draws, it may not take much time for users to find their new favorite platform on Cardano.

While the strength might not be there for Cardano yet, keep these on-chain metrics in mind as Bitcoin tries to level out and continue its climb higher. A healthy bull run from Bitcoin should lift the crypto markets with it as new users rush to the asset class in hopes of riding the next moonshot. Well-positioned ADA investors right now could stand to benefit from the ensuing FOMO that the crypto markets may encounter.