Cardano Price Supertrend Signals Crash as Key DeFi Metrics Plunge - The Market Periodical

Key Insights

• Cardano price has crashed in the past few months.
• Technical analysis suggests further downside this year.
• Cardano’s DeFi TVL, DEX Volume, and Stablecoin supply have tumbled.

Cardano price has crashed in the past few months, and its technicals suggest that it has more downside in the near term. ADA token has plunged by 40% from its highest level in August and has formed numerous bearish patterns that may lead to more downside.

Cardano Price Technical Analysis Signals a Crash is Coming

The daily chart shows that the ADA price has plunged to a low of $0.6180 and technicals suggest that a steeper crash is coming.

First, the coin has formed a head-and-shoulders pattern, which is shown in black. This pattern often leads to more downside over time.

Second, Cardano price is in the process of forming an inverse cup-and-handle pattern and is now in the handle section.

Additionally, the token has formed a death cross pattern as the 50-day and 200-day Weighted Moving Averages (WMA) crossed each other.

The token has moved below the Supertrend and Ichimoku cloud indicators, indicating that bears are currently in control.

The top oscillators like the Relative Strength Index (RSI) and the MACD have continued falling, a sign that the downtrend is gaining momentum.

Therefore, the token is likely to continue falling as sellers target the key support level at $0.5122, its lowest point as of June 22nd. A drop below the psychological level at $0.50, which is about 20% below the current level.

On the other hand, a move above the 50-day WMA at $0.7100 will invalidate the bearish Cardano forecast.

Cardano DeFi Ecosystem is Melting Down

One major bearish catalyst for the Cardano price is that it has had no active ecosystem for eight years since its launch. During this period, other similar projects, such as Solana, BSC Chain, and Tron, have attracted thousands of developers and millions of users.

Data compiled by DeFi Llama shows that Cardano has only 60 DeFi applications, with a total value locked of $275 million, a figure that has declined by 20% over the past 30 days.

While $275 million is a substantial figure, it is a minuscule amount in an industry with over $280 billion in assets. Most importantly, newer crypto projects have launched and passed it. A good example is Hyperliquid Layer-1, which has gained over $7.2 billion in TVL in the past few months.

Plasma, another new project, has gained over $7.37 billion in assets, while Linea has $1.7 billion. Therefore, there are signs that developers have largely avoided Cardano.

Cardano DEX Volume and Stablecoin Supply Have Fallen

More data continues to paint Cardano as a ghost chain. One of these is the performance in the decentralized exchange industry, where activity has waned in the past few months.

Cardano’s network handled $93 billion in DEX transactions in October, down from the last December high of $424 million. These numbers are significantly lower than those of other crypto projects, such as Solana, Base, and Avalanche.

Additionally, Cardano is not benefiting from the recently signed GENIUS Act, whose goal is to promote the use of stablecoins. Cardano’s stablecoin supply is just $35 million, a tiny amount in an industry with over $300 billion in assets.

ADA ETF Approval Odds Have Fallen

One indication of the lack of institutional interest in Cardano is that only one company, Grayscale, has applied for a spot on the ADA ETF. In contrast, 10 companies have applied for spot XRP ETFs, and nine have done that with Solana. This is likely because stablecoin issuers are concerned about demand for Cardano ETFs.

Polymarket data shows that the odds of a spot ADA ETF approval have dropped to 68%, down from 98% a while ago. This is notable since the SEC has approved several ETFs, including Solana, Hedera, and Litecoin.

Therefore, the most likely scenario is that the stock will continue to fall in the coming weeks due to its weak fundamentals and technical indicators.