- Cardano price has dropped by over 75% from its all-time high.
- There are concerns about the Fed and Cardano’s ecosystem.
- It could get worse before ADA rebounds.
The Cardano price has been under intense pressure in the past few months as concerns about its ecosystem rises. It has also dropped in line with the ongoing sell-off in stocks and cryptocurrencies. It is trading at $0.80, which is about 75% below the highest level on record, bringing its total market cap to about $25 billion. This means that Cardano’s investors have lost over $65 billion in the past few months.
Multiple challenges
Cardano is a blockchain project that seeks to become a better alternative to Ethereum. It hopes to achieve this by solving some of the toughest challenges that Ethereum has. The most basic of the challenges is its architecture since it is a proof-of-work network. This makes Ethereum to be more power-hungry and slow.
Cardano solves that challenge by using a proof-of-stake technology that is usually faster and more reliable. However, Ethereum still benefits from its first-mover advantage and the fact that it is a well-known brand.
There are several reasons why the ADA price has crashed lately. First, the performance is in line with that of other cryptocurrencies like Bitcoin and Ethereum. Indeed, in the past few months, the total market cap of all cryptocurrencies has dropped from more than $3 trillion to about $1.7 trillion.
Analysts believe that this performance is primarily because of the Federal Reserve. The Fed is expected to start hiking interest rates on March 16th. Besides, the American economy seems to be doing well as evidenced by the recent jobs numbers. Data showed that the unemployment rate has fallen to 3.8%.
Second, Cardano price has struggled because of its ecosystem. While several blockchain projects have been launched, it is substantially small. According to DeFi Llama, the TVL in Cardano has jumped to about $192 million. This makes it the 28th biggest chain in the world and most of these gains have come from SundaeSwap.
Therefore, there are concerns that Cardano will find it difficult to compete in an industry dominated by Ethereum and Terra.
Cardano price forecast 2022
Turning to the daily chart, we see that the ADA price has been in a strong sell-off in the past few months. The sell-off gained more urgency when it crossed the key support level at $0.90, which was the lowest point in July last year.
At the same time, it has moved below the 25-day and 50-day exponential moving averages. Therefore, the path of the least resistance for the Cardano price is to the downside with the key support being at $0.50. In the long-term, however, the coin will likely bounce back.
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