Cardano’s Midnight mainnet will launch today, December 8, opening the network to more developers and making the NIGHT token tradable in public exchanges. This article explains why the NIGHT token and Cardano (ADA) are poised to drop in the coming days.
NIGHT Token Crash to Mirror Other Newly Launched Coins
One of the main reasons the NIGHT token will crash is that most newly launched tokens crash despite an initial surge.
A good example of this is Monad (MON), which jumped to $0.049 shortly after the mainnet launch last month. The token has now crashed by over 45% to the current $0.025.
Similarly, Keeta’s price initially rose to $1.7030 after its highly anticipated mainnet launch and has since dropped by 84% to $0.30. ZkSync’s ZK jumped to $0.2723 in November and has now dropped to $0.036. Other newly launched tokens like Wormhole and Starknet have all plunged.
This drop typically occurs when many airdrop recipients sell their tokens while buyers remain on the sidelines. In Midnight’s case, chances are that traders who claimed during the Glacier airdrop and the scavenger stage will dump their tokens as they unlock during the redemption period.
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Meanwhile, data shows that one Cardano address holds about 7.3 billion NIGHT tokens, representing a 31% share. This address is likely the Midnight reserve for staking rewards. Another account has 4.5 million tokens, while three others hold over 1.1 billion tokens each.
The other main reason why the NIGHT token price may crash after the mainnet launch is that the layer-1 and layer-2 industry is relatively saturated. Midnight’s main benefit is its security, which relies on zero-knowledge (zk) technology.
This industry is also saturated, with top players including ZkSync, Scroll, Linea, Starknet, and Mina. As such, while its total value locked (TVL) may jump after the mainnet launch, there is a chance this growth will start to slow.
The Midnight mainnet launch is also happening during a crypto bear market. In most cases, cryptocurrencies that debut during a crash often drop amid weak demand.
Cardano Price Has Formed a Risky Pattern Ahead of the Midnight Mainnet Launch
The daily timeframe chart shows that the ADA price has dropped sharply in the past few months, crashing from the year-to-date high of $1.1725 to the current $0.4300.
The token has plunged below the critical support level at $0.5113, its lowest level in February, April, and June. It remains below all moving averages and the Supertrend indicator.
Cardano’s price has also formed an inverse cup-and-handle pattern, characterized by a horizontal support and a rounded top. Therefore, the token will likely continue falling, potentially to the key support level at $0.2760, its lowest level in August last year.
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