In the past two weeks, Cardano surged from $0.3 to $0.36. A long bottom wick on last week’s candle shows that bulls pushed the price higher. However, despite these gains, ADA still faces the risk of a drop to $0.2. Macro technical analysis points to a potential downturn. Can bulls avert this decline?
Increased TPS with Decreased Transaction Count
Cardano has increased its transactions per second (TPS), yet the actual transaction count has fallen. This situation creates a paradox, highlighting a lack of user engagement. Although the network can handle more transactions, fewer users are participating. Consequently, this reduced activity fosters a bearish sentiment surrounding ADA’s price. Investors may interpret this trend as a sign that Cardano struggles to attract new users or retain existing ones.
Declining Total Value Locked (TVL)
The total value locked (TVL) in Cardano has dropped significantly since its peak of $490 million in March 2024. By August, TVL had plummeted to $181 million. This downward trend indicates that investors are withdrawing their funds from the Cardano ecosystem. Initially, the spike in TVL resulted from market optimism following the approval of a Bitcoin ETF. However, subsequent market corrections have hindered Cardano’s ability to maintain its user base and investment levels.
Decreasing Daily Active Users Amid Growing Network Capacity
Despite Cardano’s increasing network capacity, actual usage has declined. The growing capacity suggests that Cardano can accommodate more users. However, the drop in daily active users signals a lack of demand for the network. This stagnation in user engagement raises concerns about ADA’s future price performance. As a result, the network may not fulfill its potential or attract interest from the broader crypto community.
In summary, Cardano’s recent price movements may appear positive, but the underlying metrics reveal significant risks. If these trends continue, ADA could face a price drop to $0.2. Investors should closely monitor these developments, as market conditions and user engagement will significantly impact Cardano’s future performance.
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