- Cardano price has crashed in the past few months and is sitting at a key support level.
- Technical analysis suggests that the ADA token has more downside.
- Cardano lacks major fundamental catalysts in the near term.
Cardano’s price remained in a technical bear market this week, continuing a downward trend that began in December 2024, when it peaked at $1.3257. ADA trades at $0.2800, down by 75% from its highest level in December 2024. This article discusses why Cardano may continue to decline in the near term.
Cardano Price Technical Analysis Points to a Steeper Crash
The weekly chart shows that the ADA price has been in a strong downward trend over the past few months, as the crypto market crash has accelerated and potential buyers have remained on the sidelines.
The token dropped below the key support level at $0.5105, its lowest swing in February, April, and June last year.
It has moved below the 50-week Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has dropped from the extreme overbought level of 84 in December last year to the current oversold level of 30.
The coin also remains below the Supertrend indicator, while the Average Directional Index (ADX) has jumped to 32, its highest level since January last year. A rising ADX indicator is a sign that a trend is strengthening.
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Therefore, the most likely scenario is that the coin continues to fall, with the next key support level at $0.2260, its lowest level in January and June 2023.
Cardano Ecosystem Challenges Remain
Another main reason the ADA price may continue to fall is that Cardano, despite its $9.5 billion market capitalization, remains a ghost chain, and it is unclear whether ongoing efforts to accelerate its growth will succeed.
A good example is that the total value locked (TVL) in its decentralized finance (DeFi) ecosystem comprises only 63 dApps, most of which are largely inactive. Cardano has not attracted any major developers even after Pyth Network, a top oracle joined the network late last year..
The same is happening in other key areas in the crypto industry, like real-world asset tokenization (RWA) and stablecoins. While the developers are working on measures to improve the network, there is a chance that other chains, such as Solana and Ethereum, are far ahead.
Cardano’s developers hope that the upcoming Midnight mainnet launch will help to supercharge the growth. The challenge, however, is that Ethereum is working to incorporate privacy features into its ecosystem, which will capture the market Midnight is targeting.
Additionally, it is still unclear whether Midnight will be successful in the long term. In the past, we have seen many new chains emerge only to lose momentum. Some good examples are Monad, Keeta, and Somnia.
Additional data indicate that Cardano’s demand has waned, with futures open interest continuing to fall, while the recently launched CME ADA futures are seeing weak traction.
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