Cardano price continued its recent crash and bottomed at a crucial support level. ADA dropped to the important support at $0.4900, down sharply from the year-to-date high of $1.0193. It has dropped by over 62% from its highest point in November last year. Here are the top reasons why the ADA price is falling and what to expect next.
Cardano Price is Falling Because of the Crypto Crash
The ongoing Cardano price crash is mostly due to the weakness in the crypto industry. Data shows that Bitcoin and most altcoins were deeply in the red, with the combined market capitalization falling by about $1 trillion to $3.2 trillion today.
Cardano has also plunged because of weak demand from market participants. A good example of this is the coin’s futures open interest, which has plunged from the September high of $1.95 billion to the current $641 million. Its weighted funding rate has been flat in the past few weeks.
Cardano’s demand in the spot market has also dropped. According to CoinMarketCap, the 24-hour volume dropped to $620 million from over $2 billion a few months ago.
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Cardano’s fundamentals have deteriorated in the past few months. For example, the total supply of stablecoins in the network remains at $38 million, a tiny amount in an industry with over $300 billion in assets.
Cardano’s DeFi ecosystem is not growing as well. The total value locked in the DeFi industry has dropped by over 20% in the last 30 days to around $233 million.
Charles Hoskinson and the team believe that key initiatives will help to grow their network: Leios and Midnight. Hydra is an upcoming upgrade that will make it faster by introducing parallel processing and other features. Midnight, on the other hand, is a Cardano sidechain focused on privacy. It has already inked major deals, meaning that it may achieve more success than Cardano itself.
ADA Price Technical Analysis
The daily chart shows that the ADA price has dropped sharply in the past few months, moving from the year-to-date high of $1.0193 in August to the current $0.4900. The current price is important because it coincides with the lowest swing on November 4.
Cardano’s price has also formed an inverse cup-and-handle pattern, a common bearish continuation signal. It has also formed a death cross pattern, a sign that bears are in control.
Therefore, a drop below the double-bottom pattern at $0.5120 will signal further downside, potentially to the key target at $0.2770. This target is estimated by first measuring the distance between the cup’s upper and lower sides, and between the cup’s bottom and the ground. One then measures the same distance from the cup’s lower side.
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