The price of Cardano has plummeted by more than 51% from its peak in November of the previous year, with technical indicators suggesting further declines may be ahead.
On Sunday, Cardano (ADA) was trading at $0.646, leading to a market capitalization exceeding $22.7 billion.
This recent downturn aligns with trends observed in other cryptocurrencies. Its main competitors, such as Solana (SOL), Binance Coin (BNB), and Avalanche (AVAX), have also entered a bearish phase.
Cardano Approaches Death Cross
There is a possibility that the ADA price will continue to decline in the coming weeks as a death cross pattern looms. This formation occurs when the 200-day and 50-day Exponential Moving Averages intersect while both trend downward.
In the case of Cardano, the gap between these two moving averages has diminished in recent months. Currently, the 200-day MA is at $0.729, while the 50-day MA is at $0.736. Just a few weeks ago, this spread was over 20%.
A death cross often precedes a significant downturn over time. The last occurrence of this pattern in Cardano was in May of last year, resulting in a drop of more than 40%.
Conversely, the golden cross represents the opposite scenario. Cardano experienced this crossover in November last year, which triggered an almost 200% surge in price.
Even more concerning, Cardano has also established a descending channel characterized by a series of higher lows and lower highs, along with a head-and-shoulders pattern—a well-known bearish continuation indicator.
If the death cross pattern fully materializes, the cryptocurrency is likely to continue its downward trend in the days ahead. Should this occur, the next potential support level could be $0.515, which represents its lowest point from February of this year.
ADA Confronts Significant Fundamental Issues
Cardano’s price is also challenged by several fundamental issues. The most prominent is that its ecosystem pales in comparison to those of other blockchains. The total value locked in the network has declined to $314 million.
In contrast, other recently launched networks with smaller market caps, such as Berachain, Sonic, Sui, and Sei, have significantly higher assets in their DeFi ecosystems. Berachain boasts over $2.97 billion in assets, while Sui has $1.2 billion.
The situation is similar with Cardano’s stablecoin assets, an important metric since all transactions in the blockchain sector utilize these tokens. Cardano has only $30 million in stablecoins, compared to Berachain’s $1.3 billion and Sonic’s $576 million.
Moreover, some of the most anticipated developments for Cardano have yet to occur. For instance, its integration with BitcoinOS, announced last October, has not been implemented. Additionally, it remains unclear whether the highly anticipated meeting between Cardano’s founder and a notable individual has taken place or what the outcomes were.
While a potential ADA ETF could act as a positive catalyst, the current ETH ETF outflows indicate that investors are primarily focused on spot Bitcoin funds.