- Cardano has been in a deep downward trend in the past few months.
- There are concerns about competition and the platform’s ecosystem.
The Cardano price is loitering near its lowest level since February 2021 as demand for the coin retreats. ADA is trading at $0.79, which is about 75% below its all-time high of over $3. Its market cap has crashed to about $25 billion. This means that long-term investors have lost over $65 billion since September last year.
Cardano ecosystem growth
The recent Cardano price performance is mostly because of worries of the platform’s ecosystem. According to DeFi Llama, Cardano has a total value locked (TVL) of over $183 million. This is a good number considering that Cardano introduced smart contract features in August last year.
However, a deeper dive into the network’s ecosystem shows that there are challenges. For one, SundaeSwap is the biggest DeFi in the ecosystem and has over $113 million in TVL. This means that it has a dominance of about 62%, which is a risky situation if something bad happens.
Therefore, in terms of DeFi alone, it means that Cardano is significantly overvalued since it has a market cap to TVL ratio of 137. In contrast, all the biggest platforms like Ethereum, Terra, Solana, and Avalanche have a ratio of less than 5.
This ratio could be understandable if Cardano has a strong market share in other areas of the decentralized ecosystem like in non-fungible tokens (NFT) and the metaverse.
However, while a quick look at Cardano Cube shows that there are hundreds of projects, the reality is that most of them are in their development phase. The active ones have little or no activity.
The Cardano price has also struggled because of the rising competition in its industry. Today, developers have a choice of many platforms like Avalanche, Terra, and Cosmos to build. Therefore, it will be difficult for the network to gain market share.
Cardano price prediction
On the daily chart, we see that the ADA price has been in a deep downward trend in the past few months. Along the way, the coin has formed a descending channel that is shown in blue. It is currently between this channel.
At the same time, Cardano’s decline is being supported by the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level.
Therefore, there is a likelihood that the Cardano price will keep falling in the near term as bears target the next key support level at $0.50.
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